# Appendix — Attorney's Process & Investigation Services, Inc. v. Sac & Fox Tribe of the Mississippi in Iowa

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Appendix
- **Published:** January 1, 2011
- **Citation:** 562 U.S. 1179

## Text

Supreme Court, U.S.

FILED
4 (2) 10-613 Nov 4- 2010

eee 0-10 OFFICE OF THE CLERK.

IN THE
Supreme Court of the United States

ATTORNEY'S PROCESS AND INVESTIGATION
SERVICES, INC.,

Petitioner,

SAC AND FOx TRIBE OF THE MISSISSIPPI IN IOWA,

Respondent.

On Petition for a Writ of Certiorari
to the United States Court of Appeals
for the Eighth Circuit

PETITION APPENDIX

RICHARD S. FRY DAVID B. SALMONS

MARK L. ZAIGER Counsel of Record

DIANE H. KUTZKO BRYAN M. KILLIAN

SHUTTLEWORTH & INGER- BINGHAM MCCUTCHEN, LLP
SOLL PLC 2020 K Street, N.W.

115 Third Street SE Washington, D.C. 20006

Cedar Rapids, IA 52401 (202) 373-6000

(319) 365-9461 david.salmons@bingham.com

Counsel for Petitioner

I ceeeereneeenmeeenemmenetimneenedienannenmemeeenneienenmmemnnnntiateatmmenemeenmnteemmmnnnnaemaninemenenineeemnmmmamenmnenaae
WILSON-EPES PRINTING CO., INC. — (202) 789-0096 — WASHINGTON, D.C. 20002

TABLE OF CONTENTS

Page
Kighth Circuit Opinion... la
District Court Opinion....... | . 35a
Tribal Court of Appeals Opinion 63a
NIGC Notice of Violation..... 99a
NIGC Temporary Clesure Order.... : 104a
NIGC Permanent Closure Order 110a
BIA Recognition Decisions .. 142a
Tribe’s Tribal Court Complaint 149a

API’s June 2003 Agreement.. L59a

la

United States Court of Appeals Eighth Circuit

ATTORNEY’S PROCESS AND INVESTIGATION
SERVICES, INC., Plaintiff-Appellant,

Vv.

SAC & FOX TRIBE OF the MISSISSIPPI IN IOWA,
Defendant-Appellee.

No. 09-2605.
Submitted: April 13, 2010.
Filed: July 7, 2010.
Before WOLLMAN, MURPHY, and SHEPHERD,

Circuit Judges.
MURPHY, Circuit Judge.

After Attorney’s Process and Investigation Ser-
vices, Inc. (API), a Wisconsin corporation which pro-
vides security and consulting services to casino op-
erators, was sued in tribal court by the Sac and Fox
Tribe of the Mississippi in lowa (the Tribe), API
brought this action seeking a declaratory judgment
that the tribal court lacked jurisdiction and an order
compelling arbitration. The Tribe’s lawsuit in tribal
court alleged that API committed torts while seizing
control of tribal facilities on the Sac and Fox reserva-
tion under a contract signed by Alex Walker, Jr., the
former Chairman of the Tribal Council.

The district court required API first to exhaust
its remedies in tribal court in accord with Nat7
Farmers Union Ins. Cos. v. Crow Tribe of Indians,
471 U.S. 845, 105 S. Ct. 2447, 85 L.Ed.2d 818 (1985).
After API returned to federal court, the district court
concluded that the tribal courts did have jurisdiction
over the Tribe’s claims under federal law, that the
validity of the API contract was a question of tribal

“>,
ish

law, and that it should accordingly defer to the tribal
court finding that Walker had not had authority to
bind the Tribe. The district court therefore denied
API’s motion for summary judgment and granted the
Tribe’s motion to dismiss. API appeals.

In the course of considering the issues before us
we first examine the factual background of the liti-
gation before proceeding to address the initial fed-
eral law question of whether the tribal courts have
jurisdiction over the Tribe’s lawsuit against API. We
then turn to API’s claim that it is entitled to arbitra-
tion under its contract with Walker. Finally, we
summarize our conclusions and judgment. We affirm
in part and reverse in part.

I.

The Sac and Fox Tribe of the Mississippi in Iowa
is a federally recognized Indian tribe which owns
and operates the Meskwaki Bingo Casino Hotel. The
casino operation is located in Tama, lowa on the
Tribe’s trust lands, known as the Meskwaki Settle-
ment. The Tribe’s governing body is a seven member
council. The tribal economy depends on the casino,
which the Tribe has operated for approximately fif-
teen years, and which generates millions of dollars
in annual revenue. !

1 According to the Meskwaki Casino’s website, it is the larg-
est full service casino in the Midwest. See www.meskwaki.com.
At the time of the events which led to this litigation, the casino
reportedly employed some 1,300 people and generated several
million dollars in gross revenue per week. Mark Siebert, Casino
May Reopen in 8 Weeks; The Long-Running Power Struggle on
the Meskwaki Settlement Could Be Resolved by the End of No-
vember, Des Moines Register, Oct. 1, 2003, at 1B.

3a

During the spring and summer of 2003, two
groups were competing for control of the tribal gov-
ernment, the Tribe’s finances, and the casino.? One
group was led by Walker, who had been Chairman of
the Tribal Council before the other group organized
in opposition. Members of the Tribe who were dissat-
isfied with Walker’s leadership challenged his le-
gitimacy in September 2002 by submitting petitions
demanding his recall and also that of the rest of his
council. According to the tribal constitution a special!
election is to be called upon receipt of such petitions,
but the Walker Council did not call an election. That
left the petitioning tribal members without further
legal recourse since there was not yet a tribal court.

The opposition to the Walker Council was led by
the hereditary chief of the Tribe, Charles Old Bear.
Invoking retained traditional power to form a new
tribal government, Chief Old Bear appointed seven
new council members. A majority of tribal members
signed a declaration supporting Old Bear’s actions,
and at a general meeting of the tribal membership
he administered oaths of office to the new council.
Thereafter at another general meeting of the Tribe, a
majority agreed that the members of the Walker fac-
tion were not “persons of honor, law abiding, and of
good character” as the tribal constitution requires of
office holders. The Bear Council and its supporters
then proceeded to occupy the casino and the tribal

See generally Sac & Fox Tribe of the Mississippi in Iowa,
Election Bd. v. BIA, 439 F.3d 832 (8th Cir. 2006); Jn re: Sac &
Fox Tribe of the Mississippi in Iowa/Meskwaki Casino Litig.,
340 F.3d 749 (8th Cir. 2003). Our description of the factual
background draws on those decisions as well the record in this

case.

la

government offices at the Tribe’s community center
A special election was held on May 22, 2003, at
which the Bear Council received a large majority of
the votes.

The Walker Council refused to step down, how-
ever, and a standoff ensued. Since the Bureau of In-
dian Affairs (BIA) did not act immediately on the re
sults of the May special election, its prior recognition
of the Walker Council as the governing body re-
mained in place and the casino was closed by the
National Indian Gaming Commission (NIGC). The
Walker group then turned to litigation in an attempt
to oust the Bear Council from the casino and the
tribal government, but the federal courts declined to
intervene because federal “jurisdiction does not exist
to resolve an intratriba!l leadership dispute.” Mesk
waki Casino Litig., 340 t'.3d at 766.

The month after the Bear Council won the tribal
election on May 22, 2003, Walker brought API into
the picture. Putatively acting as council chairman,
he executed a contract with API in June 2003. Under
their contract API agreed to “perform services dl-
rectly relating to the investigation of a takeover by
dissidents at the ‘Tribe’s facility located on the
Tribe’s reservation lands,” including “[i]nvestigation
of individuals involved in the unlawful acts against
the Tribal Government.” The agreement further in-
dicated that API was to undertake various projects
related to security, such as “[|djeveloping a security
plan for the re-opening of the Tribe’s Gaming Facil-
ity.” The signatories agreed to arbitrate all disputes
arising out of the contract.

API took the actions that eventually led to this
litigation on October 1, 2003. Near dawn on that
day, as the Bear Council and its supporters contin-

ued their occupation of the casino and tmbal gov
ernment offices, a group of approximately 30 API]
agents forced their way into the buildings. The two
facilities are located on tribal trust land about 2.5
miles apart and are connected by a tribal road. Some
of the API personnel were armed with batons, and at
least one carried a firearm. They seized sensitive
confidential information from both facilities related
to the Tribe’s gaming operations and finances. The
record does not disclose what other services API may
have performed under the June 2003 contract

The Walker Council never regained control of thi
tribal government or the casino after API's forceful
intervention. In special elections held in the fall of
2003 the Bear Council prevailed again, and in No
vember it was recognized by the BIA as the duly
elected tribal government. Based on the BIA’s action,
the NIGC lifted its closure order for the casino in
December 2003, and the Tribe reopened the casino

The Tribe brought its tort action against API in
the tnbal trial court in August 2005, alleging that in
the course of its raid on tribal facilities API had
caused some $7,000 in property damage, wrongfully
seized confidential information related to the Tribe’:
gaming operations and finances, and committed in
tentional torts against tribal members, including a
saults, batteries, and wrongful imprisonments
Based on these allegations the Tribe’s complaint
made claims for trespass to tribal land and chattel
and misappropriation of tribal trade secrets. It al

The Tribe’s complaint did not seek relief for tort again

,
t alleged generally that

any sper ific individual tribal member }

uch torts had been committed

made a claim for conversion of $1,022,171.26 in
tribal funds paid to API under its contract with
Walker. For these acts the Tribe sought compensa
tory and punitive damages. API moved to dismiss,
arguing that the tribal courts lacked subject matter
jurisdiction and that it had a valid contract requiring
arbitration

Shortly thereafter API filed this action in the fed
eral district court seeking a declaration that the
tribal court lacked subject matter jurisdiction and an
order compelling arbitration under the contract
signed by Walker. API moved for a preliminary in
junction against further proceedings in the tribal
court. The district court denied that motion and
stayed the action pending API’s exhaustion of reme
dies in the tribal courts. See Nat'l Farmers Union,
471 U.S. at 857, 105 S. Ct. 2447 (holding that federal
court should not consider a challenge to tribal court
jurisdiction until remedies are exhausted in tribal
courts). The parties then directed their attention to
proceedings in the tribal trial court

The Tribal Court of the Sac and Fox Tribe wa
established by the Tribal Council in 2004. It consist
of a trial court and a court of appeals. The court or-
ganization, rules of procedure, and related provisions
are contained in Title 5 of the Tribal Code. The
Tribal Court currently has one Chief Justice of the
Court of Appeals and three trial court judges, one of
whom serves as chief judge. None of the judges is a
member of the Sac and Fox Tribe. All are enrolled
members of other tribe

See Tmbal Court of the Sac & Fox Tribe of the Mississipp

in lowa, at http://www.meskwakicourt.org/personnel. htm

Ta

After concluding that it had subject matter and
personal jurisdiction, the tribal trial court denied
API’s motion to dismiss. It also determined that as a
matter of tribal law Alex Walker, Jr. and his council
had been removed from office before June 2003.
Walker therefore had been without authority to bind
the Tribe to the contract he entered into with API.
See Sac and Fox Tribe of the Mississippi in Iowa v.
Attorney’s Process and Investigation Servs., Inc., No.
API-CV-DAMAGES-2005-01, at 10-12 (Sac and Fox
Tribe of the Mississippi in lowa Tribal Court Mar.
26, 2008). For that reason the arbitration agreement
could not be enforced.

The tribal court of appeals affirmed, holding that
“the Hereditary Chiefs actions of April 14, 2003 at
the General Council and the Special Election on May
22, 2003 were sufficient to effect a change in Tribal
leadership” and that Walker’s agreement with API
was therefore invalid. Sac and Fox Tribe of the Mis-
sissippi tn Iowa v. Attorney's Process and Investiga-
tion Serus., Inc., No. API-CV-APP-2008-02-124, at 13
(Appellate Court of the Sac and Fox Tribe of the
Mississippi in lowa Dec. 23, 2008) (Tribal Court of
Appeals Decision). It also concluded that the tribal
courts had jurisdiction over the Tribe’s tort claims
under Montana v. United States, 450 U.S. 544, 566,
101 S. Ct. 1245, 67 L.Ed.2d 493 (1981), since a “tribe
may ... retain inherent power to exercise civil au-
thority over the conduct of non-Indians ... within its
reservation when that conduct threatens or has
some direct effect on the political integrity, the eco-
nomic security, or the health or welfare of the tribe.”
See Tribal Court of Appeals Decision at 16.

With its remedies in tribal court thus exhausted,
API returned to the district court which reopened

Sa

the federal case. API moved for summary judgment,
seeking a declaration that the tribal courts lacked
subject matter jurisdiction and that it was entitled to
arbitration under the contract signed by Walker. The
Tribe moved to dismiss, arguing that API’s suit was
barred by its sovereign immunity and that its claims
lacked merit in any event.

The district court denied API’s motion for sum-
mary judgment and granted the Tribe’s motion to
dismiss. Concluding that “API’s conduct had a ‘direct
effect’ on both the political integrity and the eco-
nomic security of the Tribe,” the district court de-
termined that the tribal courts had properly exer-
cised jurisdiction under Montana. It also concluded
that whether Walker had the authority to bind the
Tribe at the time he entered into the June 2003
agreement with API was a matter of tribal law. Con-
sequently it deferred to the tribal courts’ determina-
tion that Walker had not possessed that authority so
the contract did not bind the Tribe. Because the
Tribe never agreed to arbitrate any disputes with
API, it had not waived its sovereign immunity and
the arbitration agreement could not be enforced.

API timely appealed to this court. On appeal it
raises the same two arguments it made in the dis-
trict court. First, API maintains that the tribal
courts have no subject matter jurisdiction over the
Tribe’s claims and that the district court erred in its
application of Montana v. United States. Second, API
contends that federal law rather than tribal law gov-
erns the validity of the Walker contract so the dis-
trict court should not have deferred to the tribal
court determination that the contract was not bind-
ing on the Tribe. API asserts that the contract binds

Sa

the Tribe and that API is therefore entitled to an or-
der compelling arbitration of the Tribe’s claims.

We review de novo the district court’s grant of a
motion to dismiss. Braden v. Wal-Mart Stores, Inc.,
588 F.3d 585, 591 (8th Cir. 2009). The extent of
tribal court subject matter jurisdiction over claims
against nonmembers of the Tribe is a question of
federal law which we review de novo. Nord v. Kelly,
520 F.3d 848, 852 (8th Cir. 2008). In deciding the ju-
risdictional issue we review findings of fact by the
tribal courts for clear error and defer to their inter-
pretation of tribal law. Prescott v. Little Six, Inc., 387
F.3d 753, 756-57 (8th Cir. 2004).

IT.

Whether a tribal court has authority to adjudi-
cate claims against a nonmember is a federal ques-
tion within the jurisdiction of the federal courts.
Plains Commerce Bank v. Long Family Land & Cat-
tle Co., ---U.S. ----, ----, 128 S. Ct. 2709, 2716, 171
L.Ed.2d 457 (2008). Where, as here, tribal jurisdic-
tion is not specifically authorized by federal statute
or treaty, a tribe’s adjudicatory authority must stem
from its “retained or inherent sovereignty.” Atkinson
Trading Co. v. Shirley, 532 U.S. 645, 649-50, 121
S. Ct. 1825, 149 L.Ed.2d 889 (2001). The limits of
that retained power as it relates to tribal civil juris-
diction have been established primarily through ju-
dicial decisions. See Felix Cohen, Cohen’s Handbook
of Federal Indian Law § 7.01 (5th ed.2005) (hereinaf-
ter Cohen)

The scope of tribal civil authority over nonmem-
bers remained “ill-defined” as recently as 2001. Ne-
vada v. Hicks, 533 U.S. 353, 376, 121 S. Ct. 2304,
150 L.Ed.2d 398 (2001) (Souter, J., concurring). The

10a

controlling principles are broad and abstract and
must be carefully applied to the myriad disparate
factual scenarios they govern. Determining the con-
tours of tribal civil jurisdiction and the boundaries of
tribal sovereignty requires consideration of the his-
torical scope of tribal sovereignty and the evolving
place of the tribes within the American constitu-
tional order, careful study of precedent, and ulti-
mately a “proper balancing” of the conflicting inter-
ests of the tribes and nonmembers. /d. at 374 (opin-
ion of the Court).

A.

For much of our nation’s history, the Indian
tribes were regarded as “distinct, independent politi-
cal communities, retaining their original natural
rights, as the undisputed possessors of the soil, from
time immemorial.” Worcester v. Georgia, 31 U.S. (6
Pet.) 515, 559, 8 L.Ed. 483 (1832). As such, they have
been understood to “possess| | attributes of sover-
eignty over both their members and their territory.”
United States v. Mazurie, 419 U.S. 544, 557, 95
S. Ct. 710, 42 L.Ed.2d 706 (1975). Precisely which
attributes of sovereignty the tribes retain, however,
has been developing over time.

In some of its earliest decisions the Supreme
Court recognized that the tribes had been divested of
the sovereign power to carry on relations with for-
eign states by the colonization of the American con-
tinent and the tribes’ relationship with the federal
government. See Worcester, 31 U.S. (6 Pet.) at 559;
Johnson v. McIntosh, 21 U.S. (8 Wheat.) 543, 573-74,
5 L.Ed. 681 (1823). The tribes were long understood
to exercise plenary power within their respective ter-
ritories, however, subject only to the “supreme legis-
lative authority of the United States.” Talton v.

lla

Mayes, 163 U.S. 376, 384, 16S. Ct. 986, 41 L.Ed. 196
(1896); see Worcester, 31 U.S. at 557-61, 6 Pet. 515;
Williams v. Lee, 358 U.S. 217, 223, 79 S. Ct. 269, 3
L.Ed.2d 251 (1959). Thus, “[a]t one time [Indian
tribes] exercised virtually unlimited power over their
own members as well as those who were permitted
to join their communities.” Nat? Farmers Union, 471
U.S. at 851, 105 S. Ct. 2447.

Express policies of the political branches later
diminished the broad scope of tribal sovereignty, see
Montana, 450 U.S. at 563, 101 S. Ct. 1245, and judi-
cial decisions have divested tribes of certain aspects
of sovereign power which appeared inconsistent with
their status as “domestic dependent nations.” Chero-
kee Nation v. Georgia, 30 U.S. (5 Pet.) 1, 17, 8 L.Ed.
25 (1831). In other words the tribes’ “incorporation
within the territory of the United States, and their

acceptance of its protection, necessarily divested
them of some aspects of the sovereignty which they
had previously exercised.” United States v. Wheeler,
435 U.S. 313, 323, 98 S. Ct. 1079, 55 L.Ed.2d 303
(1978).

Among the most significant areas of “implicit di-
vestiture of sovereignty ... are those involving the
relations between an [ndian tribe and nonmembers
of the tribe.” Jd. at 326, 98 S. Ct. 1079. As the Su-
preme Court has recently observed, the “sovereignty
that the Indian tribes retain is of a unique and lim-
ited character.’ It centers on the land held by the
tribe and on tribal members within the reservation.”
Plains Commerce Bank, 128 S. Ct. at 2718 (quoting
Wheeler, 435 U.S. at 323, 98 S. Ct. 1079). Although
there are exceptions, tribes generally no longer “pos-
sess authority over non-Indians who come within
their borders.” Jd.

The federal principles which govern tribal civil
jurisdiction over nonmembers were set out in Mon-
tana v. United States, and that decision remains the
“pathmarking case’ on the subject.” Hicks, 533 U.S.
at 358, 121 S. Ct. 2304 (quoting Strate v. A-1 Con-
tractors, 520 U.S. 438, 445, 117 S.Ct. 1404, 137
L.Ed.2d 661 (1997)). In Montana, the Supreme Court
concluded that the Crow Tribe lacked the power to
prohibit hunting and fishing by nonmembers on non
Indian fee land within the reservation because “ex-
ercise of tribal power beyond what is necessary to
protect tribal self-government or to control internal
relations is inconsistent with the dependent status of
the tribes.” 450 U.S. at 564, 101 S. Ct. 1245. As a
general matter, the Court held, “the inherent sover-
eign powers of an Indian tribe do not extend to the
activities of nonmembers of the tribe.” Jd. at 565, 101
S. Ct. 1245. Accordingly, “efforts by a tribe to regu-
late nonmembers, especially on non-Indian fee land,
are ‘presumptively invalid.” Plains Commerce Bank,
128 S. Ct. at 2720 (quoting Atkinson, 532 U.S. at
659, 121 S. Ct. 1825).

As the Supreme Court has explained, however,
“Indian tribes retain inherent sovereign power to ex-
ercise some forms of civil jurisdiction over non-
Indians on their reservations, even on non-Indian fee
lands.” Montana, 450 U.S. at 565, 101 S. Ct. 1245.
The Court has recognized two categories of non-
member conduct which may be regulated by tribes,
commonly termed the “Montana exceptions.” First, a
“tribe may regulate, through taxation, licensing, or
other means, the activities of nonmembers who enter
consensual relationships with the tribe or its mem-
bers, through commercial dealing, contracts, leases,
or other arrangements.” Jd. Second, a “tribe may also
retain inherent power to exercise civil authority over

l3a

the conduct of non-Indians ... within its reservation
when that conduct threatens or has some direct ef-
fect on the political integrity, the economic security,
or the health or welfare of the tribe.” Jd. at 566.

The Montana exceptions are rooted in the tribes’
inherent power to protect certain sovereign interests.
See Plains Commerce Bank, 128 S. Ct. at 2723. Para-
mount among those interests is the right of Indian
tribes to “make their own laws and be governed by
chem,” Hicks, 533 U.S. at 361, 121 S. Ct. 2304, and
in accordance with that right tribes “may regulate
nonmember behavior that implicates tribal govern-
ance and internal relations.” Plains Commerce Bank,
128 S. Ct. at 2723. Ultimately then, “|t]ribal self-
government’ is at the heart of tribal jurisdiction.”
Smith v. Salish Kootenai Coll., 434 F.3d 1127, 1133
(9th Cir. 2006) (en banc) (quoting Montana, 450 U.S.
at 564, 101 S. Ct. 1245), cert. denied, 547 U.S. 1209,
126 S. Ct. 2893, 165 L.Ed.2d 922 (2006).

Although the issue in the Montana case was
about tribal regulatory authority over nonmember
fee land within the reservation, Montana, 450 U.S.
at 547, 101 S. Ct. 1245, Montana’s analytic frame-
work now sets the outer limits of tribal civil jurisdic-
tion-both regulatory and adjudicatory-over nonmem-
ber activities on tribal and nonmember land. The
Supreme Court held in Strate v. A-I Contractors that
“{a]js to nonmembers ... a tribe’s adjudicative juris-
diction does not exceed its legislative jurisdiction.”
Strate, 520 U.S. at 453, 117 S. Ct. 1404.5 Tribal court

5 Although in Hicks the Supreme Court reserved the ques-
tion “whether a trbe’s adjudicative jurisdiction over nonmem-
ber defendants equals its legislative jurisdiction,” 533 U.S. at
358, 121 S. Ct. 2304 (emphasis in original), it has indicated

(footnote continued on next page)

l4a

jurisdiction thus “turns upon whether the actions at
issue in the litigation are regulable by the tribe.”
Hicks, 533 U.S. at 367 n. 8, 121 S. Ct. 2304. The
Court has also indicated that “Montana applies to
both Indian and non-Indian land.” 7d. at 360, 121
S. Ct. 2304; see also id. at 387, 121 S.Ct. 2304
(O’Connor, J., concurring in part) (“Today, the Court
finally resolves that Montana v. United States gov-
erns a tribe’s civil jurisdiction over nonmembers re-
gardless of land ownership.”) (citation omitted);
MacArthur v. San Juan County, 497 F.3d 1057,
1069-70 (10th Cir. 2007).

Because “efforts by a tribe to regulate nonmem-
bers ... are presumptively invalid,” the Tribe bears
the burden of showing that its assertion of jurisdic-
tion falls within one of the Montana exceptions.
Plains Commerce Bank, 1285S. Ct. at 2720 (quotation
marks omitted). Those exceptions are narrow ones
and “cannot be construed in a manner that would
‘swallow the rule.” Jd. (quoting Atkinson Trading
Co., 532 U.S. at 655, 121 S. Ct. 1825).

B.

‘

The district court determined that the tribal
courts could exercise jurisdiction over the Tribe’s
claims under the second Montana exception. That
exception provides that tribal courts have authority
over nonmember conduct which “threatens or has

that “where tribes possess authority to regulate the activities of
nonmembers, ‘civil jurisdiction over disputes arising out of such
activities presumptively lies in the tribal courts,” Strate, 520
U.S. at 453, 117 S. Ct. 1404 (quoting Jowa Mut. Ins. Co. v. LaP-
lante, 480 U.S. 9, 18, 107 S. Ct. 971, 94 L.Ed.2d 10 (1987)) (al-
terations omitted).

15a

some direct effect on the political integrity, the eco-
nomic security, or the health or welfare of the tribe.”
Montana, 450 U.S. at 566, 101 S. Ct. 1245. In par-
ticular, the district court concluded that by attempt-
ing to seize control of the casino and government of-
fices during an intratribal governance dispute, API
directly affected both the political integrity and the
economic security of the Tribe.

API disputes that the second Montana exception
provides the tribal courts with jurisdiction. It main-
tains that the district court erred in its application of
Montana by overestimating the effect of its conduct
on the Tribe’s sovereign interests and by considering
acts that were irrelevant to the analysis. The Tribe
supports the district court’s reasoning, maintaining
that API’s conduct at its facilities interfered with its
right to self government and threatened its economic
well being.

The starting point for the jurisdictional analysis
is to examine the specific conduct the Tribe’s legal
claims would seek to regulate. The Montana excep-
tions focus on “the activities of nonmembers’ or ‘the
conduct of non-Indians.” Plains Commerce Bank,
128 S. Ct. at 2720 (quoting Montana, 450 U.S. at
565-66, 101 S. Ct. 1245) (emphasis in original). Each
claim must be analyzed individually in terms of the
Montana principles to determine whether the tribal
court has subject matter jurisdiction over it. See
Hicks, 533 U.S. at 367 n. 8, 121 S. Ct. 2304 (limita-
tions on tribal jurisdiction “pertain[ ] to subject-
matter, rather than merely personal, jurisdiction”);
Plains Commerce Bank, 128 S. Ct. at 2724-25 n. 2:
cf. Myers v. Richland County, 429 F.3d 740, 747-48
(8th Cir. 2005) (examining federal court subject mat-
ter jurisdiction claim by claim).

16a

In analyzing the jurisdictional issue we rely on
the record developed in the tribal] courts and the al-
legations in the Tribe’s complaint. Questions of sub-
ject matter jurisdiction often require resolution of
factual issues before the court may proceed, see, e.g.,
Osborn v. United States, 918 F.2d 724, 724.30 (8th
Cir. 1990), and that is particularly true of *nquiries
into tribal jurisdiction. It is therefore both necessary
and appropriate for the parties and the tribal court
to ensure that “a full record [is] developed in the
Tribal Court.” Nat’l Farmers Union, 471 U.S. at 856,
105 S. Ct. 2447. Here, the parties were afforded dis-
covery in the tribal trial court. API has not contested
any of the materia! allegations made by the Tribe,
and we therefore take them as true for present pur-
poses.

The parties disagree about which particular facts
are relevant to the Montana analysis. API contends
that the court should consider only the elements of
the tribal regulation or cause of action at issue in
evaluating its conduct. Because the tort claims
might not in the ordinary course “imperil the subsis-
tence’ of the tribal community,” API maintains the
tribal courts have no jurisdiction. Plains Commerce
Bank, 128 S. Ct. at 2726 (quoting Montana, 450 U.S.
at 566, 101 S. Ct. 1245). The Tribe contends that in
deciding the question of jurisdiction the court must
focus on what actually occurred at the tribal facili-
tiles.

API’s theory of tribal jurisdiction suffers from
several flaws. The most significant is that it has no
grounding in precedent. In support of its theory API
does rely on Plains Commerce Bank, but its reading
of that case does not withstand scrutiny. At issue in
Plains Commerce Bank was a discrimination claim

17a

based on traditional tribal law. /d. at 2725. Rather
than focusing on the elements of that tribal claim,
the Supreme Court was concerned with the practical
regulatory effect the claim would have on the non-
member conduct at issue. It concluded that in effect
the plaintiffs’ claim “operate[d] as a restraint on
alienation” of the non-Indian defendant's land. /d., at
2721. Plains Commerce Bank thus demonstrates
that courts applying Montana should not simply
consider the abstract elements of the tribal claim at
issue, but must focus on the specific nonmember
conduct alleged, taking a functional view of the regu-
latory effect of the claim on the nonmember.

This approach is illustrated in decisions of other
courts. For example, in Elliott v. White Mountain
Apache Tribal Court, 566 F.3d 842, 849 (9th Cir.
2009), the Ninth Circuit considered the extent of the
alleged damage before deciding that a tribe had col-
orable jurisdiction to enforce regulations prohibiting
trespass and requiring a permit to make a fire on
tribal land. The court noted that “the regulations at
issue are intended to secure the tribe's political and
economic well-being, particularly in hght of the re-
sult of the alleged violations of those regulations in
this very case: the destruction of millions of dollars
of the tribe’s natural resources.” Jd. at 850. The
court's decision thus did not rest solely on the cate-
gorical elements in the tribal regulations, but on “the
circumstances of this case.” Id.

API’s theory also suffers from a conceptual flaw.
In maintaining that tribal adjudicatory jurisdiction
turns on the elements of the regulation or cause of
action the Tribe seeks to enforce, API assumes that
the limits on tribal jurisdiction are a function of posi-
tive tribal law. That assumption misapprehends the

la

source of Indian trmbes’ civil authority, as well as the
nature of an appropriate inquiry under Montana.

The Montana exceptions recognize that the In.
dian tribes “retain inherent sovereign power,” Mon-
tana, 450 U.S. at 565, 101 S. Ct. 1245, and our task
in applying the exceptions is to outline the bounda-
ries of that retained power. Those boundaries are es-
tablished by federal law, a source of law externa] to
the tribes. See, e.g., Natl Farmers Union, 471 U.S. at
852, 105 S. Ct. 2447. Positive tribal law, in contrast,
is internal to the tribes. It is a manifestation of tribal!
power, and as such it does not contribute to the ex
ternal limitations which concern us here. Once it is
determined that certain conduct is within the scope
of a tribe’s power as a matter of federal law, our in-
quiry Is at an end.

This point is illustrated by API’s implicit conces
sion that the Tribe might have jurisdiction in this
case if only it had written regulations which specifi-
cally prohibited “hijacking the casino, interfering
with elections, and deposing |the Tribe’s] governing
council.” See API Opening Br. at 22. We need not
pause to consider how foreseeable such conduct
would have been because the absence of such regula
tions 1s irrelevant in the factual context of this case.
If the Tribe retains the power under Montana to
regulate such conduct, we fail to see how it makes
any difference whether it does so through precisely
tailored regulations or through tort claims such as

those at issue here.

We conclude that the allegations relevant to our
jurisdictional inquiry are not limited to those that
track the elements of the Tribe’s claims. The context
is also significant, and other aspects of the conduct

the claims seek to regulate are pertinent to the ex

tent they demonstrate encroachment upon the tribal!
sovereign interests recognized by Montana and it
progeny. We turn then to the Tribe’s allegation

The Tribe's claims arise from two related, but ul
timately distinct, courses of conduct which occurred
subsequent to the election of the Bear Council and
API’s agreement with Walker. First, the Tribe al
leges that between the time the contract was signed
in June and the end of September 2003, API took
possession of over $1 million in tmbal funds without
the authorization of the Tribe’s duly elected govern
ing body. The Tribe’s conversion claim arises from
this transaction (or set of transactions). Second, the
Tribe’s complaint describes API's raid on the casino
and the government offices, leading to the claims for
trespass to land, trespass to chattels, and conversion

of tribal trace secrets

We consider the latter claims first. According to
the Tribe’s allegations, on October 1, 2003 API
armed agents entered onto tribal trust land without
permission of the elected governing body, stormed
buildings vital to the Tribe’s economy and its self
government, committed violent torts against tribal!
members, forcibly seized sensitive information ri
lated to the Tribe’s finances and gaming operation
and damaged tribal property. The conduct set out in
these allegations “menace][d] the ‘political integrity
the economic security, [and] the health |and] welfare
of the Tribe to such a degree that it ‘imperilfed] the
subsistence’ of the tribal community.” Plains Com
merce Bank, 128 5S. Ct. at 2726 (quoting Montana
450 U.S. at 566, 101 S. Ct. 1245). The Tribe there
fore retains the inherent power under the second

Montana exception to regulate this conduct

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2la

Walker Council to power despite the majority’s rejec-
tion of its leadership in the May election. This was a
direct attack on the heart of tribal sovereignty, the
right of Indians “to protect tribal self-government.”
Montana, 450 U.S. at 564, 101 S. Ct. 1245.’

Finally, there remains “the critical importance of
land status” to questions of tribal jurisdiction under
Montana. Plains Commerce Bank, 1288. Ct. at 2725.
Here, the Tribe does not seek to assert jurisdiction
over non Indian fee land. The facilities API raided
are on tribal trust land. The Tribe’s trespass and
trade secret claims thus seek to regulate API’s entry
and conduct upon tribal land, and they accordingly
“stem from the tribe’s ‘landowner’s right to occupy
and exclude.” Elliott, 566 F.3d at 850 (quoting
Hicks, 533 U.S. at 359, 121 S. Ct. 2304). A “tribe’s
‘traditional and undisputed power to exclude per-
sons’ from tribal land ... gives it the power to set
conditions on entry to that land.” Plains Commerce
Bank, 128 S. Ct. at 2723 (quoting Duro v. Reina, 495
U.S. 676, 696, 110 S.Ct. 2053, 109 L.Ed.2d 693
(1990)). Tribal civil authority is at its zenith when
the tribe seeks to enforce regulations stemming from
its traditional powers as a landowner. See Hicks, 533
U.S. at 370, 121 S. Ct. 2304 (“[T]ribal ownership is a
factor in the Montana analysis, and a factor signifi-
cant enough that it may sometimes be dispositive.”)
(ellipsis and quotation marks omitted); Strate, 520

* No jurisdictional significance has been established by the
fact that the BIA and NIGC still recognized the Walker Council
at the time of the raid. As discussed in Part III.B, infra, these
federal agencies are without power to interfere in an intratribal
governance dispute. Their recognition could not give API li-
cense to do what the agencies themselves could not.

224

U.S. at 454, 1178S. Ct. 1404; Elliott, 566 F.3d at 849-
50. Adjudication of the trespass and trade secret
claims is accordingly well within the Tribe’s retained
power under Montana.

We conclude that because API’s forceful interven-
tion on October 1, 2003 threatened the “political in-
tegrity, the economic security, [and] the health [and]
welfare” of the Tribe, Montana, 450 U.S. at 566, 101
S. Ct. 1245, as well as its rights as a landowner, the
tribal courts may exercise jurisdiction over the
claims that arise out of that conduct. See Plains
Commerce Bank, 128 S. Ct. at 2724, 2726 (tribes re-
tain “inherent sovereign authority to set conditions
on entry, preserve self-government, [and] control in-
ternal relations’). The Tribe’s claims for trespass to
tribal land and chattels and conversion of tribal
trade secrets grow out of this sovereign authority.

The Tribe’s claim for conversion of tribal funds is
materially different from the other alleged torts,
however. The conversion claim does not appear to
arise directly out of what occurred during the Octo-
ber 1 raid. It arises from the payment of tribal funds
to API under its contract with Walker. According to
the tribal trial court's factual findings, all of the
money the Tribe now seeks to recover had been paid
to API by September 30, the day before the raid oc-
curred. The district court may have overlooked that
fact since it focused its discussion entirely on API's
conduct on October 1. It 1s of course possible that
API was paid in advance for planning and executirg
the raid, but that has not been alleged.

In order to establish jurisdiction over the conver-
sion claim under the second Montara exception, the
Tribe must show that the conduct it seeks to regu-
late occurred within the Meskwaki Settlement, for ‘

»

23a

Moniana and its progeny permit tribal regulation of
nonmember conduct inside the reservation.” Plains
Commerce Bank, 128 S. Ct. at 2721 (secend empha-
sis added). The conduct the conversion claim seeks to
regulate most directly is API’s unauthorized receipt
and retention of tribal funds. See, e.g., Restatement
(Second) of Torts §§ 222A, 229; cf. United States v.
Janis, 556 F.3d 894, 898 (8th Cir. 2009) (defendant’s
“receipt and retention” of tribal funds transferred in
violation of tribal policy was “conversion” under 18
U.S.C. § 1163). The Tribe makes no allegation that
the receipt or retention of the funds occurred within
the Meskwaki Settlement, however, so we cannot
conclude that the conduct most directly regulated by
the conversion claim occurred on tribal land.

Nor has the Tribe adequately delineated an indi-
rect relationship between the conversion claim as a
whole and API’s conduct on tribal land, for it re-
mains unclear what portion of the allegedly con-
verted funds may relate to the October 1 raid, as op-
posed to other services API might have performed
under the contract with Walker. The tribal appellate
court stated that the “Walker Council paid API these
funds in exchange for API’s performance of some of
the actions” of October 1, Tribal Court of Appeals
Decision at 16, but the record does not illuminate the
issue any further. The tribal trial court’s only rele-
vant factual finding was that API _ received
$1,022,171.26 in tribal funds between June 30, 2003
and September 30, 2003. Because we cannot deter-
mine what services these funds paid for, we cannot
examine what conduct by API the conversion claim
seeks to regulate.

That some of the funds likely relate to the Octo
ber 1 raid is not enough to sustain jurisdiction over

24a

the claim as a whole, for “when it comes to tribal
regulatory authority, it is not ‘in for a penny, in for a
Pound.” Plains Commerce Bank, 128 S. Ct. at 2724
(quoting Atkinson, 532 U.S. at 656, 121 S. Ct. 1825).
We conclude that the Tribe has failed to carry its
burden of establishing adjudicatory jurisdiction over
the conversion claim under the second Montana ex-
ception.

The question remains, however, whether the first
Montana exception could provide tribal court juris-
diction over the conversion claim. That exception
recognizes tribal power to regulate nonmembers
when they “enter consensual relationships with the
tribe or its members.” Montana, 450 U.S. at 565, 101
S. Ct. 1245. The tribal appellate court concluded that
the first exception did not apply because the Tribe's
claims “are premised on lack of consent and turn on
the Tribe’s claim that there was no valid Contract”
between it and API. Tribal Court of Appeals Decision
at 16 (emphasis in original). Although the district
court expressed agreement with that proposition, it
did not analyze or ultimately decide whether the
first Montana exception applies to any of the Tribe’s
claims. The Tribe now urges that the first exception
establishes jurisdiction over all of its claims. API
disagrees.

Whether the contract between API and Walker
was binding on the Tribe is an issue separate from
the question of whether the contract could establish
tribal court jurisdiction over the Tribe’s claims, for
the consensual reiationship contemplated by the
first Montana exception may be with the Tribe itself
“or its members.” Montana, 450 U.S. at 565, 101
S. Ct. 1245. Even if the contract did not bind the
Tribe, the operative question for jurisdictional pur-

poses is whether the conversion claim has a suffi-
cient nexus to the consensual relationship between
Walker and API. Atkinson, 532 U.S. at 656, 121
©. Ct. 1825; see Nord, 520 F.3d at 856. We decline to
aaswer that question without the benefit of analysis
by the district court. We therefore conclude that a
remand is necessary so that the district court may
consider the applicability of the first Montana excep-
tion to the Tribe’s conversion claim.

ITT.

API contends that regardless of whether the
tribal courts have subject matter jurisdiction under
Montana, its contract with Walker binds the Tribe
and requires arbitration of the claims brought
against it. After concluding as a matter of tribal law
that the Bear Council had been legally installed to
lead the Tribe in the May 2003 election, the tribal
courts determined that Walker had no authority to
bind the Tribe to the contract he subsequently en-
tered into in June. The district court deferred to that
determination of tribal law and therefore agreed
that the arbitration clause in the contract was not
enforceable against the Tribe. Because the duly
elected tribal authority had not agreed to the arbi-
tration provision, the district court concluded that
the Tribe’s sovereign immunity barred API’s claim
for enforcement of the arbitration clause. API con-
tinues to maintain that the arbitration clause 1s
binding, particularly since some federal agencies
continued to recognize Walker as the tribal chair-
man at the time he entered into the contract with it.

A.

The parties disagree about the scope of our re-
view of API’s arbitration claim. API maintains that

26a

we must review de novo all matters of federal law
decided by the tribal court including the arbitration
issue. The Tribe argues however that our review is
limited to determining whether the tribal courts had
jurisdiction over the issue. If they did, the Tribe con-
tends, we should accord preclusive effect to their de-
termination that the contract was invalid.

The Supreme Court’s guidance in this area has
been limited. It held in Jowa Mutual Insurance Co. v.
LaPlante that “[u]nless a federal court determines
that the Tribal Court lacked jurisdiction, ... proper
deference to the tribal court system precludes reliti-
gation of issues raised by the [underlying] claim and
resolved in the Tribal Courts.” 480 U.S. at 19, 107
S. Ct. 971. That decision has been understood as es-
tablishing “the rule that federal courts may not read-
judicate questions-whether of federal, state or tribal
law-already resolved in tribal court absent a finding
that the tribal court lacked jurisdiction or that its
judgment be denied comity for some other valid rea-
son.” AT&T Corp. v. Coeur d'Alene ‘%'ribe, 295 F.3d
899, 904 (9th Cir. 2002).8 The Ninth Circuit thus re-
views de novo a tribal court’s resolution of those
matters of federal law which are relevant to the
tribal court’s jurisdiction, but gives preclusive effect
to tribal judgments on other issues under a comity

8 See aiso Timothy W. Joranko, Exhaustion of Tribal Reme-.
dies in the Lower Courts. After Naticval Farmers Union and
Iowa Mutual: Toward a Consistent Treatment of Tribal Courts
by the Federal Judicial System, 78 Minn. L.Rev. 259, 295
(1993) (* Iowa Mutual makes clear that the parties may not
relitigate their federal claims beyond the jurisdictional chal-
lenge, unless and until the federal court determines that the

tribal court lacked jurisdiction over the dispute.”).

analysis. See id. at 903-64; Wilson v. Marchington,
127 F.3d 805, 810 (9th Cir. 1997).

We stated in dictum in Prescott v. Little Six, Inc.
that “when the tribal court applies federal law [its]
determinations are accorded no deference and are
reviewed by the district court de novo,” citing Dun-
can Energy Co. v. Th 2e Affiliated Tribes of the Ft.
Berthold Reservation, 27 F.3d 1294, 1300 (8th Cir.
1994). Prescott, 387 F.3d at 757. In Duncan the court
mentioned the de novo standard only in the course of
discussing tribal court jurisdictional determinations,
however, and it relied on FMC v. Shoshone-Bannock
Tribes, 905 F.2d 1311, 1313 (9th Cir. 1990). See Dun-
can, 27 F.3d at 1300. The Ninth Circuit has subse-
quently explained that FMC did not require a de
novo standard for all federal issues, but “merely es-
tablished a de novo standard of review for legal
questions relevant to a tribal court’s decision regard-
ing tribal jurisdiction.” Coeur d'Alene Tribe, 295 F.3d
at 904 (emphasis in original).

Even if our precedent provides uncertain guid-
ance on the standard for review of tribal court deci-
sions of federal law issues, we need not linger over
the question here. The district court determined that

9 A de novo standard of review for all questions of federal law
decided Ly tribal courts would also appear to take inadequate
account of the fact that “the tribes remain quasi-sovereign na-
tions which ... are in many ways foreign to the constitutional
institutions of the Federal and State Governments.” Santa
Clara Pueblo v. Martinez, 436 U.S. 49, 71, 98 S. Ct. 1670, 56
L.Ed.2d 106 (1978); see also Duncan, 27 F.3d at 1302 (Loken,
J., concurring) (“I do not agree that ... we conduct some sort of
direct review of the tribal court... . I know of no statute giving
the district and circuit courts jurisdiction to review tribal court

decisions.”).

28a

the question of whether Walker had authority to
bind the Tribe to the June 2003 agreement with API
is purely a matter of tribal law. If that conclusion
was correct, we need not decide in this case whether
de novo review applies to tribal court decisions of
nonjurisdictional issues of federal law. The rule is
clear that federal courts do not conduct de novo re-
view over tribal court rulings under tribal law. Pres-
cott, 387 F.3d at 756; City of Timber Lake v. Chey-
enne River Sioux Tribe, 10 F.3d 554, 559 (8th Cir.
1993), cert. denied, 512 U.S. 1236, 114 8S. Ct. 2741,
129 L.Ed.2d 861 (1994).

B.

API argues that the district court should not have
deferred to the tribal courts’ conclusion about the va-
lidity of the contract because that issue is governed
by federal law, not tribal law. API contends that
Walker had authority under federal law to take any
action necessary to operate the casino, including con-
tracting with API on behalf of the Tribe, because the
BIA and NIGC still recognized the Walker Council
as the Tribe’s governing body through the summer of
2003. API's reliance on federal agency recognition of
the Walker Council is misplaced.

Of special significance is the long established
principle that “[tjribal election disputes, lke tribal
elections, are key facets of internal tribal governance
and are governed by tribal constitutions, statutes, or
regulations.” Cohen § 4.06[1][b]fi]. We have reaf-
firmed this rule in relation to the very governance
dispute underlying this case. See Meskwaki Casino
Litig., 340 F.3d at 763-64. Because tribal governance
disputes are controlled by tribal law, they fall within
the exclusive jurisdiction of tribal institutions, see
id., and the BIA’s recognition of a member or faction

29a

is not binding on a tribe, Goodface v. Grassrope, 708
F.2d 335, 339 (8th Cir. 1983).

While the BIA may at times be obliged to recog-
nize one side in a dispute as part of “its responsibil-
ity for carrying on government relations with the
Tribe,” such recognition is made only on “an interim
basis.” Id. Once the dispute is resolved through in-
ternal tribal mechanisms, the BIA must recognize
the tribal leadership embraced by the tribe itself. Ja
see also Wheeler v. U.S. Dep't of the Interior, Bureau
of Indian Affairs, 811 F.2d 549, 552-53 (10th Cir.
1987); Cohen § 4.06[1][b] [ii]. The BIA recognizes the
force of these principles. See Wanatee v. Acting Min-
neapvolis Area Director, BIA, 31 1.B.1.A. 93, 95 (Inte-
rior Bd. of Indian Appeals July 30, 1997).

It is plain, then, that whether Walker was prop-
erly removed from office and whether he had general
authority to act on behalf of the Tribe in a govern-
mental capacity are pure questions of tribal law, be-
yond the purview of the federal agencies and the
federal courts. API concedes this proposition as it
must. It argues, however, that federal law empow-
ered Walker in a more limited and specific manner.
API contends that NIGC’s notice of violation and or-
der closing the casino authorized Walker to take self
help remedies in retaking control, pointing in par-
ticular to a statement in the notice of violation that
the Bear Council’s occupation of the casino “leaves
the federally recognized government unable to re-
gain control without the use of force.”!° More

10 Notice of Violation, No. NOV-03-02, at 2 (NIGC Apr. 30,
2003), available at http://www.nige.gov/Reading Room/En

forcement_Actions.aspx

30a

broadly, API contends that because Indian gaming is
a federally regulated activity, the federal agencies’
recognition of Walker empowered him to act on be-
half of the Tribe for purposes of operating the casino,
and thus to enter into the contract with API despite
having been replaced by the election of the Bear
Council.

As for the first contention, the NIGC actions had
neither the purpose nor the legal consequences API
ascribes to them. The notice of violation and closure
order disclose no intent to empower Walker to em-
ploy force by outsiders to retake the casino. To say
that the Bear Council was not authorized at that
point to operate the casino was not to say that
Walker could do whatever he thought necessary to
reopen it. The point of the NIGC reference about the
potential for the use of force was that the situation
at the casino posed a threat to public safety, thus
violating federal gaming law and regulations. AP]
seeks to justify its raid on the Tribe’s facilities on
tribal trust land by seizing on a few words of the
NIGC order isolated from their context. The NIGC
did not authorize the use of force in its notice, and
certainly not by private actors employed by one fac-
tion in an intratribal dispute.

Moreover, the NIGC lacked the power to author-
ize Walker to hire API with tribal funds to conduct
its raid. As the notice of violation itself makes clear,
the “NIGC defers to the Secretary of the Interior,”
acting through the BIA, in determining “which fac-
tion should be recognized as the tribal government.”
Notice of Violation at 1 (citing 25 U.S.C.
§ 2703(5)(A)). Any recognition of Walker at this point
had no special force. NIGC simply deferred the issue
to the BIA, which acknowledges that it lacks the

3la

power to determine tribal leadership. It must none
theless still conduct government to government rela
tions on an interim basis during a tribal leadership
dispute. See Wanatee, 31 I.B.I.A. at 95.

API's more general argument is that federal law
governs the validity of the contract between API and
Walker because its subject matter was operation of a
federally regulated casino. This argument is fore
closed by our precedent. We have held under circum
stances similar to those here, that whether a former
tribal leader has authority to bind his tribe to a ca
sino management contract is a matter of tribal law.
In Bruce H. Lien Co. v. Three Affiliated Tribes, 93
F.3d 1412 (8th Cir. 1996), the tribes had entered into
a casino management contract with the Lien Com
pany. Jd. at 1414. The tribal leader who had exe
cuted the agreement subsequently lost his bid for re
election, and the new leadership claimed he had not
been authorized to bind the tribe, /d. at 1415-16. We
reversed the district court’s determination that the
NIGC had “exclusive initial jurisdiction to determine
the validity of the contract.” Jd. at 1416. We con
cluded to the contrary that “the legal validity of the
management contract [was] beyond the authority of
the NIGC,” and that jurisdiction to determine its va
lidity lay in the tribal court. /d. at 1417. Further,
“the issue of the contract’s validity [did] not raise a
federal question per se.” Jd. at 1421.

Prescott v. Little Six, Inc. resolved a parallel
choice of law problem in a similar manner. In Pres
cott, former employees of Little Six (a tribal corpora
tion organized under tribal law to run the tribe’s ca
sino), sued to recover payments under draft em
ployee benefit plans created by the company. 387
F.3d at 754. Little Six claimed that the benefit plan:

had not been created in accordance with tribal cor
porate law and were therefore not binding. Jd. The
district court concluded that because the benefit
plans were governed by ERISA, their validity was a
question of federal law. Jd. at 757. We reversed, rec-
ognizing that “the initial, and dispositive, issue
was whether a valid and enforceable benefits ar
rangement existed.” /d. That issue was “a matter
governed by tribal law” and we therefore deferred to
the tribal court’s determination that the draft plans
were invalid. /d. at 757-58.

The present case is on all fours with Bruce H
Lien and Prescott. API recognizes that Walker’s au
thority to act on behalf of the Tribe in general is a
matter of tribal law. Our decisions in Bruce H. Lien
and Prescott repudiate any notion that federal regu
lation of gaming could create some special sphere of
federal law by which Walker could be empowered to
bind the Tribe after it had elected new leaders

API also argues that even if Walker was without
authority to bind the Tribe to the agreement as a
whole, he had independent federal authority to
waive the Tribe's sovereign immunity because tribal
sovereign immunity is a creature of federal law. This
is essentially the same argument API offers with re
spect to the contract as a whole, and we reject it for
the same reasons, The fact that federal !aw provides
for tribal sovereign immunity did not cloak Walker
with authority to waive the Tribe’s immunity, just a:
federal regulation of gaming did not federalize the
Tribe's internal governance disputes as they related
to casino management. Walker simply lacked au
thority to act on behalf of the Tribe in any capacity,
and this “calls into question all provisions’ in the

contract, “including provision: relat ing to arbitration

API advance a number of! poli Y pased argu
ments in support of its position. It contends for ex
ample that the inability of third parties to rely o1
federal agency recognition of a particular tribal gov
ernment could interfere with the provision of ser
vices to Indian tribes. Such contentions are irrel:
vant, for the ultimate flaw in API's argument is that
it points to no federal statute, tre ity, or regulation
manifesting congressional intent to authorize the

encroachment upon tribal sovereignty that API pr

It is Convre not the federal judiciary-which e1
oys “plenary and exclusive power over the Indian
tribes, United States v. Lara, 541 U.S. 193, 200, 124
S. Ct. 1628, 158 L.Ed.2d 420 (2004): see William
58 U.S. at 223, 79 S. Ct. 269; Lone Wolf v. Hitch
ock, 187 U.S. 553, 565, 23 S. Ct. 216, 47 L.Ed. 299

(1903), and thus “a proper respect both for triba
vereignty itself and for the plenary authority of
(Congre in this area cautions that we tread lghtl\

in the absence of clear indications of legislative in

tent. Santa Clara Pueblo, 436 U.S. at 60. 98 S. Ct
1670. There is no indication that Congr ha
granted the BIA or NIGC the authority API claim
for them, or that it intended the Indian Gamuin

Regulatory Act to displace the right of tribal men

ney] Lo elect the leader who will act in their be
half. Absent clear evidence of legislative intent
will not infer that Congré ha drastica
tailed tribal sovereignty
he district court prope) eferred to t 1
irts determination that the June 2O0¢ igreem('
} ray A yikeey / \ P| i ' ; yi hs

Prescott, 387 F.3d at 758. Because the Tribe did not
enter into any agreement with API, it has not
waived its sovereign immunity, and it is therefore
immune from suit on the contract. See Kiowa Tribe
of Okla. v. Mfg. Techs., Inc., 523 U.S. 751, 760, 118
S. Ct. 1700, 140 L.Ed.2d 981 (1998). Accordingly, the
district court did not err in dismissing API's claim

for enforcement of the arbitration avreement
IV

or the foregoing reasons, we affirm the judg
ment of the district court insotar as it held that the
courts of the Sac and Fox Tribe may exercise adjudi
catory jurisdiction over the Trnbe’s claims against
API for trespass to land, trespass to chattels, and
conversion of tmbal trade secrets. We also affirm the
judgment of the district court dismissing API's claim
for an order compelling arbitration

We reverse and vacate only that portion of the
judgment whicn concluded that the Tribal Court ha
jurisdiction under the second Montana exception
over the Tribe’s claim for conversion of tribal funds,
and we remand to the district court the question of
whether tribal court jurisdiction exists over that

claim under the first Montana exception

30a
United States District Court,
N.D. lowa, Cedar Rapids Division.

ATTORNEY’S PROCESS AND INVESTIGATION
SERVICES, INC., Plaintiff,

V.

SAC & FOX TRIBE OF THE MISSISSIPPI IN
IOWA, Defendant.

No. 05-CV-168-LRR.o
June 18, 2009.

LINDA R. READE, Chief Judge.

I. INTRODUCTION

The matters before the court are the “Motion to
Dismiss” (docket no. 48), filed by Defendant Sac &
Fox Tribe of the Mississippi in Iowa (“Tribe”), and
the “Motion for Partial Summary Judgment on Ju-
risdictional Grounds” (docket no. 63) (“Summary
Judgment Motion”), filed by Plaintiff Attorney’s
Process and Investigation Services, Inc. (“APT”).

36a

Il. RELEVANT PROCEDURAL BACKGROUND
A. Intra-Tribal Governmental Dispute!

In 2002, Alex Walker, Jr. was the leader of the
seven-member elected council that governs the
Tribe. On September 26, 2002, some Tribe members
became dissatisfied with this “Walker Council” and
submitted recall petitions for its members.

On October 10, 2002, the Walker Council pur-
ported to accept the recall petitions. However, the
Walker Council never set recall elections. On March
4, 2003, the Walker Council rejected the recall peti-
tions.

Also on March 4, 2003, the Tribe’s Hereditary
Chief Old Bear appointed an interim tribal council.
The “Bear Council” consisted of Hereditary Chief Old
Bear and six other Tribe members.

On March 26, 2003, Hereditary Chief Old Bear
administered oaths of office to the Bear Council.2 On

1 The court’s recitation of the facts is drawn from the record
before the court and the Tribal Court’s record. See Jowa Mut.
Ins. Co. v. LaPlante, 480 U.S. 9, 21, 107 S. Ct. 971, 94 L.Ed.2d
10 (1987) (“[T]he orderly administration of justice in the fed-
eral court will be served by allowing a full record to be devel-
oped in the tribal court before either the merits or any question
concerning appropriate relief is addressed.”) (quoting Nat7
Farmers Union Ins. Cos. v. Crow Tribe, 471 U.S. 845, 856, 105
S. Ct. 2447, 85 L.Ed.2d 818 (1985)). The court also notes the
parties do not dispute the material facts at issue in this case-
only their legal implication. See Brief in Support of Summary
Judgment Motion (docket no. 63-5), at 3 (discussing Tribal
Court of Appeals’s factual findings).

2 On April 8, 2003, the Walker Council filed a declaratory
judgment suit in this court against the Bear Council. The
Walker Council asked this court to determine which council

(footnote continued on next page)

37a

April 14, 2003, some members of the Tribe signed a
declaration of support for Hereditary Chief Old
Bear’s actions. These same Tribe members also
agreed that none of the members of the Walker
Council were qualified to serve on the Tribe’s coun-
cil.

On May 22, 2003, the Tribe held a special election
to resolve the intra-tribal dispute. The Tribe elected
all seven members of the Bear Council. In the fall of
2003,3 the Tribe held another election and confirmed
the Bear Council in its entirety.

B. Tribal Court Complaint

Qn August 3, 2005, the Bear Council filed a tort
action on behalf of the Tribe in the Court of the Sac
& Fox Tribe of the Mississippi in Iowa (“Tribal
Court”). See Sac & Fox Tribe of the Miss. in Iowa v.
API, xo. API-CV-Damages-2005-01 (Court of the Sac
& Fox Tribe of the Mississippi in Iowa). The Tribe
alleged trespass to land, trespass to chattel, theft of
tribal funds and misappropriation of trade secrets.

On September 23, 2005, API filed a motion in the
Tribal Court. API asked the ‘Tribal Court to dismiss
the Tribe’s complaint, claiming the Tribal Court
lacked subject matter jurisdiction over API.

C. Federal District Court Complaint

On October 21, 2005, API filed a Complaint
(docket no. 2) in this court. The Complaint alleges

was authorized to govern the Tribe. The court dismissed the
suit for lack of subject matter jurisdiction. Sac & Fox Tribe of
the Miss. in Iowa v. Bear, 258 F.Supp.2d 938 (N.D.Iowa 2003)
(Reade, C.J.), affd, 439 F.3d 832 (8th Cir. 2006).

3. The date of the fail 2003 election is unclear from the record.

38a

the Tribe, acting under the leadership of the Bear
Council, breacked a contract and asks the court to
bar the Tribe’s lawsuit in the Tribal Court. Addi-
tionally, API asks the court to compel arbitration.

On November 15, 2005, the court entered an Or-
der (docket no. 24). The court stayed the instant ac-
tion pending exhaustion of remedies in the Tribal
Court.

D. Tribal Court Considers Jurisdiction Issue

On March 26, 2008, the Tribal Court entered an
order (“Tribal Court Order’) (docket no. 48-5, Ex. 7)
in which it denied API’s motion to dismiss. The
Tribal Court concluded it could exercise civil juris
diction over API.

On December 23, 2008, the Appellate Court of the
Sac & Fox Tribe of the Mississippi in Iowa (“Tribal
Court of Appeals”) affirmed the Tribal Court. Tribal
Court of Appeals Order (docket no. 48-5, Ex. 8).

On January 20, 2009, the Tribal Court stayed its
proceedings pending this court’s resolution of issues
related to the Tribal Court’s exercise of civil jurisdic-
tion over API.

EK. API Appeals Tribal Court Decision to Fed-
eral District Court

On January 2, 2009, API filed a Motion to Reopen
(docket no. 37) in the instant action. On January 7,
2009, the court granted the Motion to Reopen
(docket no. 41) and lifted its stay.

On January 27, 2009, the Tribe filed an Answer
(docket no. 49) in which it denies the substance of
the Complaint and alleges that the court lacks sub-
ject matter jurisdiction over this action. That same
date, the Tribe filed its Motion to Dismiss.

39a

On March 1, 2009, API filed the Summary Judg-
ment Motion. The Summary Judgment Motion also
contains a resistance to the Motion to Dismiss. On
March 11, 2009, the Tribe filed a Reply (docket no.
69) in support of its Motion to Dismiss. On Apri 2,
2009, the Tribe filed a Resistance (docket no. 74) to
the Summary Judgment Motion. On April 13, 2009,
API filed a Reply (docket no. 77-2) in support of its
Summary Judgment Motion. On May 8, 2009, the
Tribe filed a corrected version of its Resistance to the
Summary Judgment Motion (docket no. 86).

API requests oral argument on the Motion to Dis-
miss and the Summary Judgment Motion (together,
“Motions”). The court finds oral argument is not nec-
essary. The Motions are fully submitted and ready
for decision.

lil. RELEVANT FACTUAL BACKGROUND
A. Parties

API is a security services corporation with its
principal place of business in Wisconsin. The Tribe is
a federally recognized Indian Tribe whose members
live on the Meskwaki Settlement (“Settlement”) in
Tama County, lowa. The Tribe owns the Mes waki
Bingo: Casino: Hotel (“Casino”) under a state-tribal
compact with the State of Iowa. See In re Sac & Fox
Tribe of the Miss. of lowa/Meskweki Casino Litig.,
340 F.3d 749, 751 (8th Cir. 2008).

B. Casino

The Casino is the Tribe’s “economic engine” and
is located on the Settlement. Tribal Court of Appeals
Order at 16. The National Indian Gaming Commis-
sion (“NIGC”) regulates the Casino.

40a

C. Dispute

From September 2002 through the fall of 2008,
the Tribe was embroiled in the intra-tribal govern-
mental dispute discussed above. The Bear Council
ultimately prevailed over the Walker Council. The
Bear Council has retained control of the Tribe’s gov-
ernment and the Casino during the pendency of the
instant action.

D. Agreement

In June of 2003, after the Bear Council had been
elected in the May 2003 elections, the Walker Coun-
cil continued to try to do business on behalf of the
Tribe. On June 16, 2003, the Walker Council pur-
ported to enter into an agreement with API on behalf
of the Tribe (“Agreement”) (docket no. 2-2, Ex. A).
The Agreement purported to engage API on behalf of
the Tribe for “investigation, security and law en-
forcement consulting services/.]” Agreement at 1.
More specifically, the Agreement stated API would
“perform services directly relating to the investiga-
tion of a takeover by dissidents at the [Casino] ” in-
vestigate “individuals involved in the unlawful © cts
oy t the Tribal Government” and “[i]nvestigate
alr_jations of unlawful acts and tribal policy viola-
tions of the dissident group involving Tribal funds[ ]
and gaming operations.” Jd. at 1-2.

The Agreement contained an arbitration clause.
The arbitration clause states, in relevant part:

i. The parties shall make efforts to settle through
dialogue and negotiation any disputes that may
arise out of this Agreement. However, should
such efforts fail after thirty (80) days, the dispute
shall be submitted to arbitration, which shall be
conducted in Des Moines, lowa, in accordance

4la

with the Commercial Arbitration Rules of the
American Arbitration Association. The arbitra-
tion shall be heard before one arbitrator chosen
by consensus of the parties. If the parties cannot
mutually agree on an arbitrator, the arbitrator
shall be chosen in accordance with the Rules of
the American Arbitration Association. The deci-
sion of the arbitrator shall be final and binding
upon the parties.

ll. [ ... ] Judgment on the award of the arbitrator
may be entered by the Federal District Court for
the Northern District of Iowa under the Federal
Arbitration Act or [an] lowa state court pursuant
to lowa law. For this purpose, the Tribe and API
hereby irrevocably consent to the jurisdiction
over their persons of such courts for such pur-
pose, including to enter judgment on an arbitra-
tion award, and waive any defense based on im-
proper venue, inconvenient venue, or lack of per-
sonal jurisdiction.

ui. The failure of any party to submit voluntarily
to arbitration shall be deemed to be a breach of
this Agreement. Provided, that if either party has
a good faith position that a dispute does not arise
under this Agreement, that party may file an ac-
tion in the Federal District Court for the North-
ern District of Iowa, or the lowa state courts, to
determine whether the dispute is the proper sub-
ject of arbitration under this Agreement.

Id. at 5.

At the time API executed the Agreement, it was
under the impression that the Walker Council was
the Tribe’s true governing body. However, API was
incorrect. On March 26, 2008, the Tribal Court held

42a

the Walker Council had no authority to enter into
the Agreement on behalf of the Tribe because the
Bear Council had exclusive governing power over the
Tribe at the time the Agreement was executed. The
Tribal Court held that, consequently, the Agreement
was invalid and unenforceable against the Tribe.
This decision was affirmed by the Tribal Court of
Appeals.

E. Bear Council’s Communications with Fed-
eral Agencies

Hereditary Chief Old Bear and others communi-
cated with various federal agencies regarding the
newly installed Bear Council. However, these federal
agencies refused to recognize the Bear Council for
purposes of gaming activities and other federal mat-
ters until after the second election in the fall of 2003.
Kor instance, on March 17, 20U3, Hereditary Chief
Old Bear received a letter from the United States
Department of the Interior Bureau of Indian Affairs
(“BIA”) in which the BIA stated it could not involve
itself in the dispute over whether the Walker Coun-
cil or Bear Council was the Tribe’s true governing
council. In this letter, the BIA also indicated that it
recognized the Walker Council as the Tribe’s govern-
ing body. On April 1, 2003, Hereditary Chief Old
Bear received a letter from the United States De-
partment of the Interior Office of the Secretary
(“Secretary”) in which the Secretary stated it contin-
ued to recognize the Walker Council as the Tribe’s
official leadership. On May 9, 2003, Hereditary Chief
Old Bear received a letter from the BIA stating it
continued to recognize the Walker Council as the
governing Tribal avthority. On May 23, 2003, He-
reditary Chief Old 'ear received a letter from the
Secretary stating that, because the May 22, 2003

43a

election had not been held in accordance with tribal
law, the Department would not recognize the results
of that election.

F. API Raids the Casino

On October 1, 2003, API raided the Casino pur-
suant to the Agreement with the Walker Council and
without authority from the Bear Council. At the time
of the raid, the Bear Council had governing control
over the Casino. Approximately thirty individuals
associated with API stormed the Casino. Many were
armed with batons. At least one individual affiliated
with API had a firearm. The Tribe alleges API seized
tribal property, assaulted and falsely imprisoned
Tribe members and employees, intentionally dam-
aged Tribal property and misappropriated the
Tribe’s trade secrets. Additionally, API took contro}
of the Tribe’s gaming information, including the
Tribe’s financial records, surveillance, ongoing gam-
ing investigations, personne] files and legal files.

IV. ANALYSIS
A. Parties’ Arguments

In the Complaint, API asks the court for a de-
claratory judgment that the Tribal Court may not
exercise civil jurisdiction over API. API alleges the
Tribe breached the Agreement and seeks damages
for the breach.

In its Motion to Dismiss, the Tribe argues the
court must dismiss the instant action because (1) the
court lacks subject matter jurisdiction over the dis-
pute; (2) sovereign immunity bars the Tribe from be-
ing sued in the instant action; and (3) API has failed
to state a claim upon which relief can be granted.
The Tribe also argues the Tribal Court has civil ju-

44a

risdiction over API with respect to the Tribe’s tort
claims.

In its Motion for Summary Judgment, API argues
(1) the court has subject matter jurisdiction over the
Complaint; (2) the Walker Counci! waived the
Tribe’s sovereign immunity in the Agreement pursu-
ant to the arbitration clause; and (3) the Tribal
Court has no civil jurisdiction over API. The court
examines each of these arguments below.

B. Subject Matter Jurisdiction and Sovereign
Immunity

The Tribe argues the court must dismiss the in-
stant action for lack of subject matter jurisdiction
because it “has not waived its sovereign immunity
from this suit.” Brief in Support of Motion to Dismiss
(docket no. 48-2), at 8. The Tribe conflates subject
matter jurisdiction and sovereign immunity. As the
Fighth Circuit Court of Appeals noted,

[S]overeign immunity is jurisdictional in nature.
Sovereign immunity, however, is not of the same
character as subject matter jurisdiction. First of
all, tribal sovereign immunity may be waived in
certain circumstances and is subject to the ple-
nary power of Congress. Lack of subject matter
jurisdiction, on the other hand, may not be
waived. Second, sovereign immunity operates es-
sentially as a party’s possible defense to a cause
of action. In contrast, subject matter jurisdiction
is primary and an absolute stricture on the court.
Finally, a waiver of sovereign immunity cannot
extend a court’s subject matter jurisdiction.

We find, therefore, that sovereign immunity is a
jurisdictional consideration separate from subject
matter jurisdiction|[.]

45a

In re Prairie Island Dakota Sioux, 21 F.3d 302, 304-
05 (8th Cir. 1994) (internal citations omitted); see
also Ninigret Dev. Corp. v. Narragansett Indian We.
tuomuck Hous., 207 F.3d 21, 28 (1st Cir. 2000)
(“[A]lthough tribal sovereign immunity is jurisdic-
tional in nature, consideration of that issue always
must await resolution of the antecedent issue of fed-
eral subject-matter jurisdiction.”). Accordingly, the
court first considers whether it has subject matter
jurisdiction over the instant action and then pro-
ceeds to determine whether sovereign immunity ap
plies.

C. Subject Matter Jurisdiction

The party seeking to establish the court’s subject
matter jurisdiction, API, bears the burden of proving
it. Osborn uv. United States, 918 F.2d 724, 730 (8th
Cir. 1990). API alleges the court has subject matter
jurisdiction over the Tribe under Count I, the re-
quest to bar the Tribal Court’s exercise of civil juris-
diction over API, pursuant to 28 U.S.C. § 1331. API
alleges the court has supplemental jurisdiction over
Count II, its breach of contract claim, pursuant to 28
U.S.C. § 1367(a).4

1. Count I: request for declaratory judgment

The court has federal question subject matter ju-
risdiction over Count I, API’s request for a declara-
tory judgment concerning the Tribal Court’s exercise

4 The Complaint contains a typographical error. In its juris-
dictional statement, API alleges the court derives supplemental
jurisdiction over the breach of contract claim pursuant to “28
U.S.C. § [}1365(a).” Complaint at 4 7. Section 1365(a) governs a
court’s jurisdiction over actions brought by the United States
Senate, not supplemental jurisdiction.

46a

of civil jurisdiction over API. Count I requires the
court to decide whether the Tribal Court may exer-
cise civil jurisdiction over API, a non-Indian. “The
question of whether an Indian tribe has the power to
compel a non-Indian to submit to the civil jurisdic-
tion of a tribal court is a federal question under 28
U.S.C. § 1331.” DeMent v. Oglala Sioux Tribal Court,
874 F.2d 510, 513 (8th Cir. 1989) (citing Nat? Farm-
ers Union, 471 U.S. at 852).

2. Count II: breach of contract

As in other cases, to exercise supplemental juris-
diction over a claim against an Indian tribe, “the
‘claims within the action’ must ‘derive from a com-
mon nucleus of operative fact.” Auto-Owners Ins. Co.
v. Tribal Court of Spirit Lake Indian Reservation,
495 F.3d 1017, 1024 (8th Cir. 2007) (quoting Myers
v. Richland County, 429 F.3d 740, 745 (8th Cir.
2005)); see also Wisconsin v. Ho-Chunk Nation, 512
F.3d 921, 936 (7th Cir. 2008) (exercising supplemen-
tal jurisdiction over plaintiffs state law contract
claim against a tribe in Indian Gaming Regulatory
Act case). “A plaintiff's claims derive from a common
nucleus of operative fact if the ‘claims are such that
[the plaintiff} would ordinarily be expected to try
them all in one judicial proceeding.” OnePoint Solu-
tions, LLC v. Borchert, 486 F.3d 342, 350 (8th Cir.
2007) (quoting United Mine Workers of Am. v. Gibbs,
383 U.S. 715, 725, 86 S. Ct. 1130, 16 L.Ed.2d 218
(1966)).

The torts forming the basis of the Tribe’s claims
against API are all rooted in the Agreement, because
API raided the Casino pursuant to its terms. The
court is satisfied that API's claims arise from a
common nucleus of operative fact. Therefore, the

t/a

court shall exercise supplemental jurisdiction over
Count Il

D. Sovereign Immunity

Next, the court turns to consider whether sover
eign immunity bars the court’s exercise of jurisdic
tion in this case. “While federal jurisdiction exists |
... ], [a tribe]’s sovereign immunity [may] still bar| |
claims from being brought against it unless [its] im
munity has been waived by the tribe or unequive
cally abrogated by Congress.” Ho-Chunk Nation, 512
F.3d at 936 (internal quotation marks omitted). “It is
well settled ‘that Indian tribes possess the same
common-law immunity from suit treditionally en
joyed by sovereign powers.” Mo. River Servs., Inc. '
Omaha Tribe of Neb., 267 F.3d 848, 852 (8th Cir
2001) (quoting Val-U Constr. Co. v. Rosebud Sioux
Tribe, 146 F.3d 573, 576 (8th Cir. 1998)). “[A] tribe
may waive its immunity, but ‘a tribe’s waiver must
be “clear.”” Id. (quoting C & L Enters., Inc. v. Citizen
Band Potawatomi Indian Tribe of Okla., 532 U.S
411, 418, 121 5. Ct. 1589, 149 L.Ed.2d 623 (2001)). A
tribe may waive its immunity in an arbitration
agreement. /d

The Tribe argues sovereign immunity bars the
court from adjudicating both Count | and Count II

The court examines the application of the doctrine of
sovereign immunity as to each count separately

1. Count I: request for declaratory judgment

The Tribe argues that sovereign immunity bars
Count I, that is, API’s request for a declaratory judg
ment concerning the propriety of the Tribal Court’:
exercise of civil jurisdiction over API

-

48a

Although there do nui appear to be any cases dis-
cussing whether sovereign immunity bars a federal
district court from considering this issue, controlling
precedent clearly presumes that sovereign immunity
does not bar a district court from reviewing a tribal
court’s decision to exercise civil jurisdiction over a
non-member. See, e.g., Bruce H. Lien, 93 F.3d at
1421 (‘7F[T)he tribal courts themselves are given the
first opportunity to address their [civil] jurisdiction
and explain the basis (or lack thereof) to the parties.
As a jurisdictional inquiry, appeal of this issue may
be had in the federal district court.”) (internal cita-
tions omitted) (emphasis added); Duncan Energy, 27
F.3d at 1300 (8th Cir. 1994) (“Once tribal court
remedies have been exhausted, altjribal [cJourt’s de-
termination of tribal [civil] jurisdiction may be re-
viewed in the federal district court.”) (citing /Jowa
Mut. Ins. Co. v. LaPlante, 480 U.S. 9, 19, 107 5S, Ct.
971, 94 L.Ed.2d 10 (1987)). The court also notes that,
if sovereign immunity barred this claim, then no
federal district court could consider this issue. The
wealth of federal case law concerning tribal court
civil jurisdiction over non-members demonstrates
that sovereign immunity does not bar a district court
from considering this matter.

To be sure, principles of sovereign immunity pre-
vent a federal district court from considering this
question before a tribal court has considered it, In
November of 2005, this court stayed the instant ac-
tion because the parties had not exhausted Tribal!
Court remedies concerning the Tribal Court's exer-
cise of civil jurisdiction over API. API v. Sac & Fox
Tribe of the Miss. in lowa, 401 F.Supp.2d 952, 958
(N.D. Iowa 2005) (Reade, C.J.). In doing so, the court
recognized that “the examination of tribal sover-
eignty and jurisdiction should be conducted in the

49a

first instance by the tribal court itselff.]" Duncan
Energy Co. v. Three Affiliated Tribes of Fort Berthold
Reservation, 27 F.3d 1294, 1299 (8th Cir. 1994): see
also LaPlante, 480 U.S. at 16 (applying exhaustion
rule to diversity cases and holding a federal court
should “stay its hand in order to give the tribal court
a full opportunity to determine its own jurisdiction”
(anternal quotation marks omitted)).

As discussed above, the parties have exhausted
Tribal Court remedies on the civil jurisdiction issue.
The Tribal Court found that its exercise of civil ju-
risdiction over API was proper. The Tribal Court of
Appeals affirmed that decision. Because the civil ju
risdiction question has been fully exhausted in the
Tribal Court system, sovereign immunity does not
bar the court’s consideration of this issue.

In conclusion, the court finds that sovereign im

munity does not bar Count I
2. Count Il: breach of contract

Next, the court turns to consider whether sover
eign immunity bars Count II, API’s breach of con-
tract claim. API argues the Walker Council waived
the Tribe’s sovereign immunity as to Count II when
the Walker Council entered into the Agreement con
taining the arbitration clause on behalf of the Tribe.
Absent waiver by a tribe or action by Congress,
“It]Imbes enjoy immunity from suits on contracts,
whether those contracts involve povernmental or
commercial activities and whether they were made
on or off a reservation.” Kiowa Tribe of Okla. v. Mfg.
Tech., Inc., 523 U.S. 751, 760, 118 S. Ct. 1700, 140
L.id.2d 981 (1998). A tribe’s consent to arbitration
may operate as a waiver of its sovereign immunity.
C&L Enters., 532 U.S. at 423.

’

5Oa

The validity of the Agreement turns on whether
the Walker Council was the governing body of the
Tribe at the time the Agreement was executed. As
the court previously noted, the question over the
Tnbe’s true governing body is an intra-tribal dispute
and not subject to the court’s jurisdiction. APT, 401
IK Supp.2d at 961 (citing Longie v. Spurit Lake Tribe,
400 F.3d 586, 589 (8th Cir .2005) (explaining that
federal courts should refrain from exercising juris
diction pursuant to 28 U.S.C. § 1331 when the case
involves an intra-tribal dispute)); In re Sac & Fox
Tribe, 340 F.3d at 766 (affirming this court’s decision
that it lacked subject matter jurisdiction to resolve
an intra-tribal Jeadership dispute).

The Tribal Court determined the Walker Council
was not the governing body at the time the Agree-
ment was executed and that the Agreement was
therefore not binding. Accordingly, the court defers
to the Tribal Court’s finding that the Agreement. is
not valid and finds any waiver of sovereign immu-
nity in the Agreement. to be ultra vires. See Prescott
v. Little Six, Ine., 387 F.3d 753, 756-57 (8th Cir.
2004) (“|Wle defer to the tribal courts’ interpretation
of tribal law.”).

API argues the Tribal Court’s determination that
the Agreement is invalid has no bearing on the
Walker Council’s ability to waive the Tribe’s sover-
eign immunity. The court disagrees. The Kighth Cir-
cult Court of Appeals has held a challenge to the va-
lidity of a contract with a tribe “calls into question
all provisions contained therein (including provisions

relating to arbitration, sovereign immunity, and fed-
eral district court jurisdiction).” Bruce H. Lien Co.,
93 F.3d at 1417. If the Walker Council was not au-
thorized to enter into the Agreement, then it follows

5la

that it was not authorized to waive the Tribe's sover
elgn immunity pursuant to the arbitration clause
contained in the Agreement. /d.; see also 42 C.dS.
Indians § 22 (Online ed. 2008) (“A tribal official can-
not waive the tribe’s immunity unless authorized to
do so by tribal law.”). The Tribal Court held the
Walker Council was not the Tribe’s governing body
at the time the Walker Council purported to enter
into the Apreement and waive the Tribe’s sovereign
immunity through the arbitration clause. API pre
sents no other evidence that the Tribe waived its
sovereign immunity. Accordingly, the court finds the
Tribe did not waive its sovereign immunity to be
sued for breach of the Agreement in this court. As a
result, the Tribe’s sovereign immunity bars API from
bringing its breach of contract claim in this court.

This holding is limited in scope to Count II, the
breach of contract claim. As set forth above, sover-
eign immunity does not bar the court from consider-
ing Count I, the request for a declaratory judgment
concerning the Tribal Court’s exercise of civil juris
diction over API.

Because sovereign immunity bars the court’s consideration
of API's breach of contract claim, it need not address the Tribe's
alternative argument that API’s breach of contract claim fails
to state a claim upon which rehef can be granted.

6 API argues a provision in the Code of Federal Regulations,
25 C.FLR. § 83.2 (2009), supports its argument that the Tribe
waived its sovereign immunity in the Agreement. Section 83.2
states that when the BIA acknowledyes a tribe’s existence, the
recognized tribe “is entitled to the immunities and privileges
available to other federally acknowledged Indian tribes by vir
tue of their government-to-povernment relationship with the
United States as well as the responsibilities, powers, limita-
tions and obligations of such tribes.” 25 C.FLR. § 83.2. API in

(footnote continued on next page)

mS),
OLA

In the court's view, API misapprehends the pur
pose of § 83.2, which 1s “to establish a departmental
procedure and policy for acknowledging that certain
American Indian groups exist as tribes.” See 25
C.F.R. § 83.2. This regulation does not give an inva-
lid tribal council the power to waive a tribe’s sover
eign immunity simply because it 1s recognized as a
tribe’s governing body by the BIA. Moreover, as with
other sovereign nations, sovereign immunity mnheres
to a tribe as a nation-not to a coalition of tribe mem
bers purporting to act as a tribe’s governing author
ity. See Ninigret Dev., 207 F.3d at 29 (noting a tribe's
“sovereign immunity predates the birth of the Re
public” and “rests on the status of Indian tribes as
autonomous political entities, retaining their orign
nal natural rights with regard to self-governance’)
(internal quotation marks omitted).

EK. Tribal Court’s Jurisdiction Over API

Next, the court turns to consider whether the
Tribal Court may exercise civil jurisdiction over AP]
with respect to the Tribe's tort. claims in hght of the
fact that APL is a non-Indian third party. Generally,
a tribe may not exercise civil jurisdiction over non
Indian third parties. See Montana v. United States,
450 U.S. 544, 565, 101 S. Ct. 1245, 67 L.Ed.2d 493
(1981). There are two exceptions to this general rule.
Kirst, “[a] tribe may regulate, through taxation, h
censing, or other means, the activities of nonmem

sists the BIA’s acknowledgment that the Walker Council was
the Tmbe’s governing council at the time the Avreement was
executed “vested the Walker Council with power over the
Tribe’s federal sovereign immunity.” Brief in Support of Motion
for Summary Judgment (docket no. 63), at 19. API cites no au

thority for this interpretation of § 83.2

58a

bers who enter consensual relationships with the
tribe or its members, through commercial dealing,
contracts, leases, or other arrangements.” Jd. See-
ond, a tribe has civil jurisdiction over non-Indians

when a non-Indian engages in conduct on tribal land
that “threatens or has some direct effect on the po-
litical integrity, the economic security, or the health
and welfare of the trmbe.” /d. at 566. “These excep-
tions are limited ones, and cannot be construed in a
manner that would swallow the rule or severely
shrink it[.]” Plains Commerce Bank v. Long Family
Land & Cattle Co., --- U.S. ----, ----, 128 S. Ct. 2709,
2720, 171 L.Ed.2d 457 (2008) (internal citations and
quotation marks omitted). A tribal court must first
examine whether it has civil jurisdiction over a non-
Indian, and, after the tribal court completes its ex-
amination, a district court has federal question ju
risdiction to review whether a tribal court has ex
ceeded the lawful limits of its jurisdiction. Nat
Farmers, 471 U.S. at 856.7

7 The Tribal Court of Appeals drew an unusual distinction
between tortious nonmember conduct on fee land and tortious
nonmember conduct on trust land; namely, that Montana ap-
plies only to tribal fee lands, not tribal trust. lands. The ‘Tribal
Court of Appeals concluded that, because the Casino is on trust
land rather than fee land, Montana should not apply, and, con
sequently, the “Tnbe retain[ed] presumptive civil jurisdiction”
over API. Tribal Court of Appeals Order at 16 (emphasis in
original). API challenges this conclusion. After concluding Mon
tana did not apply, however, the Tribal Court of Appeals ap
plied the traditional Montana analysis and concluded in the
alternative that, even if Montana applied, the Tribal Court had
jurisdiction over APT under Montana. As set forth below, the
court agrees with the Tribal Court of Appeals’s alternate con-
clusion. Accordingly, the court need not consider whether Mon-

(footnote continued on next page)

o4a

1. Protective prong

The Tribe (Bear) argues the Tribal Court has civil
jurisdiction over API under the protective prong of
the Montana exception: “A tribe may [| ... ] retain in
herent power to exercise civil authority over the con
duct of non-Indians on fee lands within its reserva
tion when that conduct threatens or has some direct
effect on the political integrity, the economic secu
rity, or the health or welfare of the tribe.” Montana,
450 U.S. at 566. “The conduct must do more than in
jure the tribe, it must ‘imperil the subsistence’ of the
tribal community.” Plains Commerce, 128 S. Ct. at
2727 (quoting Montana, 450 U.S. at 566). “]T]he ele-
vated threshold for application of [this] Montana ex-
ception suggests that tribal power must be necessary
to avert catastrophic consequences.” 7d. (quoting F.
Cohen, Handbook of Federal Indian Law § 4.02[3]|[c]
at 232, n. 220 (2005 ed.)). Federal courts recognize
that “it can be argued that torts committed by or
against Indians on Indian land always threaten or
have some direct. effect on the political integrity, the
economic security, or the health or welfare of the
tribe.” Philip Morris USA, Inc. v. King Mtn. Tobacco
Co., Inc., 552 F.3d 1098, 1109 (9th Cir. 2009) (nter-
nal quotation marks omitted). Accordingly, a federal
district court should bear in mind that the “general-
ized threat that torts by or against its members pose
for any society[ |] is not what the [protective] Mon-
tana exception is intended to capture.” Jd. (citing At-
kinson Trading Co., Inc. v. Shirley, 532 U.S. 645, 657
n. 12, 121 8S. Ct. 1825, 149 L.Ed.2d 889 (2001) (‘Mon
tana ‘s second exception can be misperceived. The

tana applies to Tribal land held in trust because the Trnbal

Court’s civil jurisdiction over API is proper in any event.

55a

exception is only triggered by nonmember conduct
that threatens the Indian tribe; it does not broadly
permit the exercise of civil authority wherever it
might be considered necessary to self-government.”)
(emphasis in original)). Instead, Montana ‘s protec-
tive exception “envisions situations where the con
duct of the nonmember poses a direct threat to tribal
sovereignty.” Id. (citing Atkinson, 532 U.S. at 657 n
12).

The court agrees with the Tribe’s assessment that
“[a] case more suitable for application of the ‘protec-
tive’ prong can scarcely be imagined.” See Tribe’s Re-
sistance Brief (docket no. 86-3), at 17. APs conduct
had a “direct effect” on both the political integrity
and the economic security of the Tribe. Montana, 450
U.S. at 566. And, API’s conduct did more than injure
the Tmbe-it “imperil[ed]” its subsistence. Plains
Commerce, 128 S.Ct. 2727. The court examines
API's impact on the Tribe’s political integrity and
economic security, 1n turn.

i. Political integrity

APIs conduct imperiled the Tribe’s political in-
tegrity. In essence, API invaded the Tribe’s land to
quell an intra-tribal governmental dispute. API ar
gues this intra-tribal dispute was merely incidental
to the raid. API contends that, if the court finds the
raid imperiled the Tribe’s political integrity, any ac-
tion taken by a non-member on tribal land during an
intra-tribal governmental dispute would justify a
court’s invocation of the second Montana exception.
The court disagrees. API’s actions were made and
intended to be a direct challenge to the Bear Council.
API raided the Casine on behalf of the Walker Coun-
cil, which was not th» Tribe’s true governing author-
ity. API conducted the raid pursuant to the Agree

56a

ment, and the Agreement’s terms indicate the ser
vices API was expected to provide related directly to
the Tribe’s governmental affairs. See Agreement at 4]
1.2.A (stating API “shall perform services directly re
lating to the investigation of a takeover by dissidents
at the [Casino] located on the ‘Tribe’s reservation
lands” and “[liJnvestigat{e] [ ... | individuals involved
in the unlawful acts against the Tribal Govern
ment”). In other words, API was hired to assist in
the resolution of an intra-tribal governmental dis
pute, which strikes at the heart of the second Mon
tana exception. The fact API believed it was operat:
ing with the consent of the Tribe’s governing author
ity, that is, the ousted Walker Council, has no effect
on the application of this exception. In truth and in
fact, API raided the Casino specifically to weaken
one side of an intra-tribal governmental dispute,
which happened to be the Bear Council, the ‘Tribe's
true governing body. This is an act with potentially
catastrophic consequences to the Tribe's govern
ment. The court concludes this merits the applica
tion of the protective prong of the Montana exception
and that the Tribal Court’s exercise of civil jurisdic
tion over API was proper.

ii. Economic security

APIs conduct also imperiled the Tribe’s economic
security. The center of API’s activity was the raid of
the Casino, which is the Tribe’s economic hub. As the
Tribal Court of Appeals noted, the Casino “is the
Tribe’s economic engine, and is where some of the
‘Tribe’s most sensitive documents are kept. It was
precisely these things over which API sought control,
on behalf of the Walker Council.” ‘Tribal Appeals
Court Order at 16. The Tribe’s economic viability
turns on the Casino's operations, and API sought to

er,
Jia

wrest control of the Casino out of the hands of the
Tribe’s true governing body, the Bear Council, and
into the hands of the Walker Council. The fact API
believed it was operating pursuant to the Tribe’s au
thority does not change the fact that API forcefully
and intentionally compromised the Tribe’s economic
center. The court finds API's raid of the Casino had
potentially catastrophic consequences to the Tribe’s
continuing economic security.

API argues the Casino was not operating at the
time the raid occurred, thereby diminishing the eco-
nomic instability the raid created. Even so, the raid
of the Casino had potentially catastrophic conse-
quences to the ‘Tribe. API sought to transfer control
of the Casino to Tribe members who were without
authority to manage and operate the Casino. API
also misappropriated Casino trade secrets. These
and other acts had a potentially devastating impact
on the continuing viability of the Casino, whether or
not it was operating at the time of the raid.

ili. Cases applying protective prong

The cases in which courts have applied the sec-
ond Montana exception are aligned with the instant
action.

In Babbitt Ford, Inc. v. Navajo Indian Tribe, the
Ninth Circuit Court of Appeals held the protective
prong of Montana’s jurisdictional exception applied
to an automobile company’s repossession of a vehicle
on tribal land. 710 F.2d 587, 593 (9th Cir. 1983). The
Babbitt court reasoned this conduct had a direct ef-
fect on the tribe’s health and welfare because
“Irjepossession of an automobile has the potential to
leave a tribfe] member stranded miles from his or
her nearest neighbor” and “repossession without the

58a

consent of the tribe member also may escalate into
violence, particularly if others join the affray.” Jd.

In Fry v. Colville Tribal Court of the Confederated
Tribes of the Colville Reservation, a district court ap
plied the second Montana exception due to a stipu-
lated judgment designating jurisdiction in the tribal
court because “the nonmember defendant put the po-
litical integrity of the tribe and the tribal court at
issue in any failure to abide by the terms of the
judgment.” No. CV-07-0178-EFS, 2007 WL 2405002,
*3 (E.D. Wash. Aug.17, 2007). The judgment at issue
provided for the disposition of a significant amount
of real and personal property within tribal bounda
ries. Id.

In Elliot v. White Mountain Apache Tribal Court,
a district court held the second Montana exception
likely applied because a non-member’s conduct
caused a fire that burnt a great deal of timber on the
tribe’s land. No. CIV 05-4240-PCT-MHM, 2006 WL
3533147, *5 (D. Ariz. Dec.6, 2006). The court held
this impacted the tribe’s ability to use its own land.
Id. The court reasoned the non-member’s conduct
“threaten[ed] the economic security of the tribe
based upon the interference of the use of the tribe’s
land and timber and the overall welfare of the tribe
as such resources are material to the tribe’s stabil-
ity.” Id.

In Cheromiah v. United States, a district court
applied the second Montana exception in a case 1n-
volving a medical malpractice claim against a medi-
cal services provider. 5& F. Supp. 2d 1295, 1305
(D.N.M.1999). The hospital “provide[d] the only
western medical care most [...] Tribe members re-
ceive[d].” Jd. The court held “[mJalpractice by the
major medical provider to the Tribe has a significant

59a

impact on ‘the right of reservation Indians to make
their own laws and be ruled by them’ as it may jeop-
ardize their very ability to survive as a people.” /d.
(quoting Strate v. A-1 Contractors, 520 U.S. 438, 458,
1178. Ct. 1404, 137 L.Ed.2d 661 (1997)).

In summary, the court finds that the second Mon
tana exception applies and that the Tribal Court's
exercise of civil jurisdiction over API was proper

2. Consent prong

The Tribe also argues the Tribal Court has civil
jurisdiction over API under the consent prong of the
Montana analysis. Because the court has already
found the Tribal Court’s exercise of civil jurisdiction
over API was proper under the protective prong of
the Montana exceptions, the court need not address
this issue. The court notes, however, that both the
Tribal Court and Tribal Court of Appeals declined to
apply this Montana exception. This court would do
the same. See, e.g., Montana, 450 U.S. at 565 (“A
tribe may regulate, through taxation, licensing, or
other means, the activities of nonmembers who enter
consensual relationships with the tribe or its mem-
bers, through commercial dealing, contracts, leases,
or other arrangements.”).

3. Miscellaneous arguments

API argues that two other factors bar the Tribal
Court from exercising civil jurisdiction over API: (1)
25 C.F.R. § 83.2 and (2) the arbitration clause. The
court addresses these arguments, in turn.

i. Section 83.2

API argues that the question of whether the
Walker Council had authority to enter into the
Agreement and choose arbitration for dispute resolu

60a

tion is a matter of federal law, not tribal law. API
claims the question of who “the ‘true’ governing
council of a tribe for tribal issues is simply irrelevant
to the federal issue of who can waive the tribe’s sov-
ereign immunity and agree to resolve disputes in a
non-tribal forum.” API Summary Judgment Motion
Br. at 17 (emphases in original). In support of this
argument, API cites 25 C.F.R. § 83.2, the regulation
discussed above that gives rise to federal recognition
of Indian tribes. API contends that, because the BIA
and NIGC recognized the Walker Council as the gov-
erning body of the Tribe under § 83.2, this recogni-
tion attributed federal powers to the Walker Council,
including the federal power to waive sovereign i1m-
munity through an arbitration clause.

For the same reasons discussed above, the court
finds § 83.2 is inapplicable. As the Tribal Court of
Appeals held, “[t]Jhe BIA recognition process exists
for the benefit of the federal-tribal relationship, not
to give disappointed third parties an authority
higher than the tribe as to tribal law.” Tribal Court
of Appeals Order at 9. The Tribal Court found the
Walker Council was without authority to enter into
the Agreement. The Walker Council was therefore
without the authority to bind the Tribe to the arbi-
tration clause in the Agreement. The court will not
apply § 83.2 to void the Tribal Court’s finding on the
Tribe’s intra-tribal governmental dispute or its effect
on the Agreement.

API argues that, if the court does not interpret
and apply § 83.2 in the manner it suggests, “[a]ny
private business doing business with a tribe during
an intra-tribal leadership dispute would run the risk
of its [a]greement being voided by subsequent events
beyond its control when a new tmbal council came

bla

into power.” API Summary Judgment Br. at 22. The
court recognizes this risk; however, this 1s a risk API
chose to take. As the Tribal Court of Appeals noted,
a “chilling effect” on a nonmember’s negotiation with
a tribe may be “inevitable” given the possibility of
intra-tribal disputes. Tribal Court of Appeals Order
at 10. However, “businesses that choose to work with
an affirmatively ousted tribal council are taking a
substantial risk. They ought not be heard [to] com
plain when the gamble fails.” /d. (emphasis in origi-
nal). The court concludes the unique set of facts giv
ing rise to the Tribal Court’s civil jurisdiction is un
usual and appropriate for Montana’s rarely applied
protective exception

ii. Arbitration clause

API’s argument that the arbitration clause in thi
Agreement bars the Tribal Court from exercising
civil jurisdiction is a non-starter. As the court noted
in its earlier decision

Before the arbitration clause in the Agreement
can be enforced, a court must determine whether
the Agreement is valid. If (the Walker Council]
had authority to enter into the Agreement and it
was validly formed, then, the court agrees that
the arbitration clause should be enforced. If,
however, on the other hand, [the Walker Council]
was without authority to enter into the Agree
ment on behalf of the Tmbe and the Agreement i:
found to be an invalid and unenforceable con
tract, the provisions of the contract, including the
arbitration clause, cannot be enforced.

Attorneys Process, 401 F. Supp. 2d at 961. The
Tribal Court found the Agreement is void. The arbi
tration clause contained in the Agreement is there

fore unenforceable. /d.; see also Bruce H. Lien Co., 9
F.3d 1417 (noting a challenge to the validity of a con
tract with a tmbe also challenges the validity of an
arbitration agreement in the contract). The arbitra
tion clause cannot operate to bar the Tribal Court

from exercising civil jurisdiction over API becauss

,

he Bear Council never agreed t

In ummary. the court conclud the riba
Court exercise of civil jurisdiction over API 1
pI pe!

V. CONCLUSION

In heght f the foregoing. IT IS ORDERED
THAT:

(1) ‘The Moti m tw Dism) docket no |

GRANTED:

(2) The Summary Judgment Motion (docket

63) is DENIED; and

(3) The Complaint (docket no. 2) is DISMISSED.

The Clerk of Court is DIRECTED to close tl!

(a te

‘TIS SO ORDERED

63a

APPELLATE COURT OF THE
SAC & FOX TRIBE OF THE MISSISSIPPI IN
IOWA

sac and Fox Tribe of the Mississippi in Towa,
Plaintiff,

Attorney's Process and Investigation Services, Inc
Defendant
Case No. API-CV-APP-2008-02-124
MEMORANDUM AND ORDER

I. Background

This appeal arises from a dispute regarding the
validity of a contract drat the embattled former Sa
& Fox Tribe of the Mississippi in lowa’s (the
“Tribe’s’) Tribal Council, the “Walker Council,” al
legedly entered on behalf of the Tribe with a non
member security services company, Defendant At
torneys Process and Investigation Service, In¢
(“API”). The Tribe filed a complaint in Tribal Court,
making a variety of tort claims against API, basing
its argument in part on the fact that the contract
was invalid because the Walker Council bad no au
therity to enter it. The Tribe argued that by the
time the Walker Council purported to enter the con
tract, the tribal membership had ousted the Walker
Council, and API was aware of the ouster. The Tribe
therefore made various tort claims and sought reim
bursement for all money paid under the contract

API moved to dismiss, mainly arguing that the
Tribal Court lacked subject matter jurisdiction over

64a

it, and that the contract was valid, requiring arbitra
tion of any disputes. On March 26, 2008, the Tribal
Court. held that it had subject matter jurisdiction
over API and that the contract was, indeed, invalid,
and API appealed (the “Tribal Court Order”). The
material facts and procedural posture are as follows.

A. Walker Council’s refusal in act on
recall petitions.

As of September 2002, the popularly-elected,
seven-member Tribal Council included Alexander
Walker, Jr., Frank Wallace, Jr., Aaron Walker, Lyle
Walker, Vern Jefferson, Talbert Davenport, Sr., and
Calvin Johnson, Sr. See Tribal Court Order at 3 4 2.
On September 26, 2002, the Walker Council received
recall petitions for all seven members, which com
plied with constitutional requirements for validity,
in that they contained signatures of more than thirty
percent of eligible voters. Jd. at 3 4/4 1-2, citing Art
XII § 1 of the Const. and Bylaws of the Tribe (“Tribal
Coast.”) (authorizing recall petitions). The petitions
stated on their face that they were based on “the
right as provided by Article XII, Section 1, of the
Constitution and By Laws.” Tribe’s App’x at Tab |
(recall petitions for all seven members). On October
10, 2002. the Walker Council ostensibly accepted the
petitions, but never acted on them and failed to set
recall elections. See Tribal Court Order at 3 4] 3, 494
3-4. Almost five months later, on March 4, 2003, the
Walker Council rejected the petitions, which it had
no authority to do.! Jd. at3 94,494

While the Walker Council later claimed that there were
defects in two of the petition signatures, it did not make this
assertion until May 2002 see Tribal Court Order at 9 9 18. 10

(footnote continued on next page)

65a

B. Response of Hereditary Chief Old Bear
and Tribal membership.

Also on March 4, the Hereditary Chief Charles
Old Bear took action to appoint an entirely different
interim Tribal Council, including Homer Bear, Jr.,
Wayne Pushetonequa, Harvey Davenport, Jr., Ray
Young Bear, Keith Davenport, Deron Ward, and
frank Blackcloud (known as the “Bear Council’)? Id.
at 4 45. On March 26, 2003, at a General Meeting
of the Tribal membership, Hereditary Chief Old
Bear administered the required oaths of office. Jd. at
4 9 7, 5 § 7; see also API App’x at Tab 6, Ix. U-10
(Tribal Council Mtg. Minutes, 3/26/03).

On April 14, 2003, at another General Meeting, a
majority of the eligible voters signed a declaration of
support for Hereditary Chief Old Bear’s actions. See
Tribal Court Order at 5 4] 8; see also Tribe’s App’x at
Tab 6 (Tribal members’ declaration of support); API
App’x at Tab 6, U-15-17 (Gen’l) Mtg. Minutes,
4/14/03). At the top of the sheets was language de-
tailing the purpose of the meeting as follows

44 18-19. Given the de mintmus nature of this defense, the
Tribal Court gave it no weight and this finding did not affect its
conclusions of law. /d. We agree with that assessment

While the Tnbal Court made no findings of fact based upon
a March 8, 2003 letter Chief Bear wrote to “Meskwaki Tribal
Members,” the letter is part of the record and memorializes the
Walker Council's refusal to act on the petitions, the Bureau of
Indian Affairs’s (“BIA's”) deferral to the Tribe to resolve the
leadership dispute internally, the unavailability of a Tmbal
Court at that time to address the dispute, and Hereditary Chief
Old Bear’s actions after reviewing “the Tmbe’s traditional

ways.” See Tribe's App’x at Tab 5. It also appears to bear the

signatures of the members of the new Bear Council. /d

66a

To determine if all members of the
Tribal Council must be recognized as
persons of honor, law abiding, and of
good character. The voting members of
the ‘Tribe shall be the sole judge of
these qualifications.

The [Tribal] Constitution requires in
ARTICLE IV, Sec. 2 that all members of
the Tribal Council must be recognized
as such. We the undersigned voting
members of the Tribe have attempted to
use other provisions of our Constitution
to officially make these decisions about
the qualifications of the elected Tribal
Council. We have been disallowed by
the elected Tribal Council the use of the

constitutional recall procedure

Because the elected Tribal Council ha
denied the use of the Constitution to
the members of the Tribe, we the voting
members of the Tribe, are compelled LO
carry out our constitutional duty to de
termine if all members of the elected
Tribal Council can be recognized a
persons of honor, law abiding, and of

good character

‘T'ribe’s App’x at Tab 6. The sheets went on to state
that where a Tribal Council member was not “a per
son of honor, law abiding, and of good character, hi
position shall terminate immediately upon the final
vote tally.” Jd. The voters who signed this declara

tion represented a majority of the eligible voters,

“overwhelmingly” determining that none of the

67a

seven members of the Walker Council met this stan-
dard. See Tribal Court Order at 5 ¥ 8.

On May 22, 2003, the Tribe also conducted a spe-
cial election to fill the seven Tribal Council Member
positions, and all seven members of the Bear Council
were elected, again by overwhelming majorities. /d.
at 5 § 9,64 9. And although the Tribal Court did
not make findings on this point, the record appears
to show that the Tribe thereafter held an election in
the fall of 2003, and the Bear Council was again con-
firmed in its entirety. See, e.g., Tribe’s Suppl. Hrg.
Br. at 2 (8/25/06) (noting Bureau of Indian Affairs
(“BIA”) recognized results of fail 2003 election).

c. Walker Council's refusal to step down,
entry of API Contract, and APIs al-
leged torts.

At no time before the fall 2003 elections did the
Walker Council stop purporting to conduct business
on behalf of the Tribe. It continued to hold itself out
as the official Tribal Council. On June 16, 2003, af-
ter most of the events described above had occurred
and there were significant questions as to whether
the Walker council had any legitimate authority, the
Walker Council purported to enter into a contract on
behalf of the Tribe with API (the “Contract”). See
Tribal Court Order at 6 4 11. The purpose of the
API Contract was to “determine whether tribal funds
have been misappropriated by those individuals who
have illegally seized control of tribal buildings and
assets,” and API was to “investigate the possible
conversion of tribal funds and any related illegal ac
tivity against the Tribe.” Jd. at 6 {| 10; see also API
App’x at Tab 6, Ex. B (API Contract, 6/16/03). The
Contract contained an arbitration clause that re-
quired any dispute under the Contract to be submit

68a

ted to arbitration in leu of Tribal Court or other
court, and that any arbitration award would be en-
forced in Iowa state or federal court. See Tribal
Court Order at 6 4 13, 7 4 13, 8 4 13.

Between June 30, 2003 and September 30, 2003,
the Tribal Court found (and API did not dispute)
that $1,022,171.26 was transferred from the Tribe to
API. /d. at 6 § 12. The Court’s basis for this num-
ber was the affidavit of the Comptroller of the Tribe,
Ram K. Dhanwada. Jd. This figure represents more
than $11,000 per day for this period of time. The af-
fidavit further included Mr. Dhanwada’s claim that
the transfer “was not authorized by the Tribe.”8 Jd
Despite the Tribe’s demand that API return the
money, claiming it was never authorized by the ac
tual Tribal Council, the Bear Council, it has never
been returned. The Tribe claimed that “the former
tribal leaders who contracted with API [the Walker
Council] were without authority to bind the Tribe,
and that API was sufficiently on notice of the leader
ship dispute existing and prior to and at the time the
Contract was executed, to have actual knowledge
that the former tribal] leaders were without authority
to bind the Tribe.” Tribal Court Order at 1. This
formed the basis of the Tribe’s conversion claim

against API. 7d.

Moreover, the Tribe alleged in its Complaint that
API committed various other torts against the Tribe,
largely associated with events of October 1, 2003.
See Tribal Comp. at 2-6. The Trbe claimed on that

Both parties earlier had stipulated this statement of opin
ion be stricken from the affidavit. See API ate API App’x at

Tab 4(Hrg. T. (7/27/06) at 8 Ins. 13-25, 9 Ins. 1-16)

69a

date that API trespassed in the Tribe’s Community
Center and Casino, which is on trust land within the
Tribe’s reservation (the “Settlement,” in and around
Tama, lowa), and seized Tribal property. Jd. The
Tribe claimed that API “broke in” with “approxi-
mately 30 enforcers,” some of whom “were armed
with batons and one or more was armed with a fire-
arm,” and who “committed unlawful assaults and
batteries and false imprisonments against tribal
members and employees,” amongst other allegations.
Id. at 5 ¥ 32. While there, the Tribe also claimed
API intentionally damaged and destroyed Tribal
property. Jd. at 2 4]§| 7-10.

The Trnbe further alleged that API “obtained and
exercised control over all or nearly all tribal gaming
information and tribal gaming commission informa
tion, including but not lmited to detailed compiled
tribal gaming financial information, information re
yarding the extent and scope of tribal security and
surveillance coverage, information regarding ongo-
ing gaming commission investigations, all personne!
files, all legal files, and devices used to insure the
integrity of the Casino’s operation....” Jd. at 2 4 11, 3
{| 11. This confidential property contained detailed,
sensitive information regarding every aspect of the
gaming operation to which access was restricted,
was stored in secured areas, was subject to various
tribal gaming laws and regulations, included valu
able trade secrets, was protected from disclosure by

confidentiality agreements and policies, and which
would damage the Tribe if disclosed. Jd. at 3 4 13
16, 4 44} 17-19. The Tribe alleged that API received
access to it “only by criminally breaking into and en-
tering the secured areas of the Casino and by the
threat to use armed force and by the use of other
force.” Jd. at 3 4 15. The Tribe claimed it suffered

70a

property damages, and that it would suffer other se
rious damages through any disclosure of this infor
mation. See, e.g., 2 4 10, 4 419.

D. Federal agency position that
Walker Council retained leadership
until at least until fall 2003 elec-
tions.

Before and after the Bear Council was installed
in the spring of 2003, Hereditary Chief Old Bear and
others communicated with various federal agencies
regarding the new Bear Council. See, e.g., Tribal
Court Order at 8 94 13-14, 9 44] 14, 16-17. But these
agencies refused to recognize the Bear Council for
purposes of gaming activities and other federal gov
ernment matters until the fall 2003 elections. Jd. at
8 13 (noting on April 30, 2003 that the National In
dian Gaming Commission (“NIGC”) sent notice of
violation based on continued recognition of Walker
Council on); 9 4 14 (March 14, 2003 letter from Mid
west Regional Director of the BIA refusing to recog
nize Bear Council); 9 4 16 (May 23, 2003 letter from
Secretary of the Intenor in response to request to
certify special election stating that it “was not called
and held in accordance with tribal law and, there
fore, we will not recognize the results of it”); 9 4147
(August 28, 2003 letter from BIA stating 1t continued
to recognize Walker Council). While the record does
not expressly state this, the Secretary of the Intenor
(and, correspondingly, all other federal agencies)
continued to recognize the Walker Council, and ap

parently refused to recognize the Bear Council, for at

7la

least six months after the Hereditary Chief took ac
tion.4

E. Tribal Court case.

In August 2005, the Tribe filed a complaint seek-
ing damages from AP] relating to its tort claims, in-
cluding for conversion of Tribal funds and the Octo
ber 1, 2003 trespass and misappropriation of trade
secrets. See Tribal Court Order at 1.

In September 2005, API moved to dismiss under
Tribal Court Rule C-7(b) (and later submitted an
“Application to Conduct Limited Discovery” under
Rule C-15). This was based in part on its argument
that the Tribal Court’s lacked subject matter juris
diction over API as a nonmember. /d. at 2. In the
alternative, API argued that the Contract was valid
and, therefore, its arbitration clause was binding
upon the Tribe, and no Tribal Court remedy was

avallable. Id

The parties conducted limited discovery, as API
had requested. Jd. at 2-3. This included exchange of
documents and at least one deposition, and the par
ties submitted supplemental briefing and appeared
at a hearing on July 27, 2006. See API's App’x at
Tab 4 (Hrg. T., 7/27/06)

‘ See, &.Z., Tribe's Supp! lirg Br. at 2 (8/25/06) (noting BIA
recognized results of fall 2003 election). The NIGC ultimately
ordered the Tribal Casino closed because it did not yew the
Bear Council as authorized to operate it. See API App’x Tab 6,
Ex. D (NIGC Notice of Violation, 4/30/03); see also In re: Sac &
Fox Tribe of the Mississippi in lowa/Meskwaki Casino Litig.,
340 F.3d 749, 753-55 (8th Cir. 2003) (discussing casino closure
and NIGC action due to non-federally-recognized Bear Council

operating it in place of Walker Council)

7).
iZa

On March 23, 2008, the Trbal Court denied
API’s motion.® See Tribal Court Order at 12 4 1. It
held that it had subject matter jurisdiction under
Section 5-4101, and personal jurisdiction over API
under Section 5-4102 (2)-(8). Tribal Court Order at
10 4 1. It held that the Walker Council violated its
constitutional duty to hold elections once it received
the recall petitions. /d. at 10-11 4 2, citing Tribal
Const. Art. XII, § 1. When the Walker Council abro
gated its duty, the Tribal members “were justified in
approving the exercise of the retained powers of the
Hereditary Chief and Clan Representatives to estab
lish a Tribal Council where all members are recog
nized as persons of honor, law abiding, and of good
character.” 7d. at 11 4 3. The Tnbal Court also
stated that the May 22, 2003 Special Election was “a
mandate” on behalf of the Bear Council, and against
the Walker Council. 7d. at 11 § 4. The Tribal Court
further held that the BILA’s continued recognition of
the Walker Council after the Special Election was
not determinative of the Walker Council’s actual fit
ness, and that “|t]he voting members of the Tribe
shall be the sole judge of these qualifications.” Jd. at
11 4 15. Therefore, the Trmbal Court concluded that

The two-and-a-half-year delay in reach

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386017_2715%3A2. Public record. Not legal advice.